Vol. 11, No. 1: Full Issue

Denver Journal of International Law & Policy

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Vol. 11, no. 1: Full Issue

Denver Journal International Law & Policy

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VOLUME 11

1981

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VOLUME 11 NUMBER 1 FALL 1981

FACULTY COMMENT

WHY STUDY INTERNATIONAL LAW? A DECADE OF THE INTERNATIONAL LEGAL STUDIES PROGRAM AT THE UNIVERSITY OF DENVER COLLEGE OF LAW...... Ved P. Nanda Ved P. Nanda, Professor of Law and the Director of the International Legal Studies Program at the University of Denver College of Law, traces the history of the Program from its inception in 1971 to the present. Noting that "[tihe faculty decision made in 1971 to establish the International Le- gal Studies Program at the College of Law reflected a sound curriculum philosophy," Professor Nanda begins by highlighting a few of the several factors which shaped and influenced the direction of the Program both at its inception and -today. He discusses the six components of the Program, including (A) The Academic Program; (B) The Denver Journal of Interna- tional Law and Policy; (C) The Denver International Law Society; (D) The Myres S. McDougal Distinguished Lecture on International Law, the An- nual Regional Conferences of the American Society of International Law, and the Jessup International Moot Court Competition; (E) Internships, Ex- ternships, and Career Opportunities; and (F) Continuing Legal Education. Noting that "[ihe last decade has been a period of growth and excitement for the Program," Professor Nanda concludes that "[tihe Program has a promising future."

ARTICLES FREEDOM TO TRAVEL: Is THE ISSUANCE OF A PASSPORT AN INDVDUAL RIGHT OR A GOVERNMENT PREROGATIVE? ...... Paul Lansing 15 Noting that "fain individual's right to freedom of international travel has been overwhelmingly linked to his possession of a passport in the recent past," Professor Lansing discusses the recent Supreme Court case of Haig v. Agee. Professor Lansing begins his analysis by discussing the historical aspects of the freedom to travel. Observing that "[t]he history of the freedom to travel has been somewhat obscure, varying from an early proclamation promoting the right of free travel to more recent instances wherein the right to free international travel has been limited for national security and foreign policy reasons," Professor Lansing then discusses the case of Philip Agee. The Agee case focuses both on the power of the Secretary of State to refuse or to revoke a passport on national security grounds, and also on the right to international travel and the ways in which that right may be limited. Constitutional prohibitions on the right to travel are also discussed, as well as several multilateral efforts regarding the freedom of travel. Profes- sor Lansing concludes that the Court in Agee "placed undue emphasis on the foreign policy aspect of the passport question [and) increased the State J.D.; James K. Paupey, B.B.A., J.D.; Cooper Wayman, B.S., M.S., Ph.D., J.D.; Michael 0. Wirth, B.S., M.A., Ph.D.; Lucius E. Woods, B.S., LL.B.; Brooke Wun- nicke, B.A., LL.B.; James R. Young, B.S.C.E., J.D.; Adjunct Lecturers in Judicial Ad- ministration: Stephen P. Ehrlich, B.S.B.A., J.D.; Barbara J. Gletne, B.A., M.A.; Mau- reen M. Solomon, B.A., M.P.A.; Bernard D. Steinberg, B.Mus., J.D.; Daniel . Vredenburg, B.S., M.S.J.A.

The Denver Journal of International Law and Policy is an integral part of the University of Denver's International Legal Studies Program. The purpose of the Program is to prepare students for effective roles in the contemporary interdependent world of business, federal government, and international relations. The faculty includes members of the regular faculty at the University of Den- ver College of Law, professors from other schools and departments of the University, and several practicing attorneys. The Director of the program is Professor Ved P. Nanda of the College of Law. In addition to the regular course of study, the International Legal Studies Program makes special provision for internships, externships, and summer study in the United States and abroad. Students may also enroll in a joint degree program with the Grad- uate School of Business and Public Management or the Graduate School of Interna- tional Studies, leading to the degrees of M.B.A., M.A., or Ph.D., in addition to the J.D. Other components of the program include the Denver International Law Society, the Myres S. McDougal Distinguished Lecture in International Law and Policy, the annual regional conference of the American Society of International Law, and the Philip C. Jessup International Law Moot Court Competition. Please address inquiries concerning the program to: Professor Ved P. Nanda, Director International Legal Studies Program University of Denver College of Law 200 West 14th Avenue Denver, Colorado 80204 USA Telephone (303) 753-3427 Department's area of discretion at the expense of the individual's right to travel." FREEDOM OF MOVEMENT IN THE CARIBBEAN COMMUNITY ...... Daniel C. Turack 37 Noting that "(freedom of movement among the British Caribbean territories did not exist during the late colonial period nor does it fully exist now," Professor Turack provides an historial overview of the freedom of movement in the Caribbean community. Although the United Kingdom historically had an open door policy on freedom of movement from all parts of the Commonwealth, the policy did not have a counterpart in the Carribbean. This common law right of entry and exit has been replaced in the Carib- bean territories by legislation restricting the freedom of movement. Profes- sor Turack discusses national legislation pertaining to the freedom of movement in each CARICOM country, and discusses the emergence of 'the Caribbean Common Travel Document. Commenting that "[wihatever common law right of entry may have existed in the past has been displaced by constitutional provisions and legislative enactments which accord highly discretionary authority to each government's officials to restrict the movement of persons into and out of their respective countries," Professor Turack concludes that "(tlhe freedom of establishment of provisions of the CARICOM Treaty are purposely weak and allow the prospective host country the necessary latitude to curtail any significant influx of nationals from other CARICOM members. Thus, further relaxation of restrictions on migration must await further developments." MEMBERSHIP CRITERIA FOR THE ICAO COUNCIL: A PROPOSAL- FOR REFORM ...... Christopher T. Tourtellot 51 The International Civil Aviation Organization (ICAO) is the primary international organization dealing with aviation. Observing that "despite the radical changes in the size and composition of the international community that have occurred since the Chicago Convention of 1944, the criteria for membership in the ICAO Council have remained unchanged," Mr. Tourtel- lot provides a comprehensive proposal for a new article 50(b) to amend the Chicago Convention. After a brief review of the Council's duties, Mr. Tourtellot discusses earlier attempts to create international aeronautical bodies. The problems that have emerged since the ICAO's inception are also considered. Other contemporary specialized agencies such as the U.N. Security Council, IARA, ILO, and the WHO are compared to provide some perspectives on how ICAO's criteria might be changed. Noting that "ItIhe ICAO performs a vital function in establishing uniform safety standards and by providing a forum for the debate of aeronautical issues," Mr. Tourtellot concludes that "[slimplification of the Council's election procedure and increased attention to the needs of less industrialized states would represent a useful step (tJo reflect the swiftly changing world of international aviation." STUDENT COMMENT THE STATUS OF FOREIGN SOVEREIGNS IN PRIVATE ANTITRUST ACTIONS ...... John A. Jostad 81 This Comment investigates one aspect of the "extraterritorial" application of American antitrust laws-the status of a foreign nation under U.S. antitrust law. The intention of the Comment is to provide greater understanding of the problem and to clarify the issues, namely, the position of the courts respecting a sovereign's standing to sue as a private plaintiff, whether a foreign sovereign will be recognized as a named defendant, some of the international implications involved, and the legislative steps being considered to address the problems that arise when a foreign state is involved in antitrust litigation. In addition, a major focus of this Comment is upon the definitions of terms used in the antitrust laws, as well as the For- eign Sovereign Immunities Act of 1976 (FSIA). Because U.S. antitrust law is not applied consistently in an international context, this Comment concludes that "itihe solution lies in domestic legislation passed after a thorough investigation." DEVELOPMENTS CANADA'S NEW BANK ACT: INTEGRATION OF FOREIGN BANKS INTO THE CANADIAN BANKING SYSTEM ...... J.G. Taylor 105 EXPORT TRADING COMPANIES & S. 734 ...... 115 COMPREHENSIVE GUIDELINES FOR THE COMMERICAL ACTIVITIES EXCEPTION OF THE FOREIGN SOVEREIGN IMMUNITIES ACT: Texas Trading & Milling Corp. v. Federal Republic of Nigeria ...... 123 EMS CURRENCY RATES REALIGNED ...... 134 Rex v. Cia. Pervana De Vapores, S.A.: SOVEREIGN IMMUNITY AND THE CONSTITUTIONAL RIGHT TO A JURY TRIAL ...... 137 BOOK REVIEWS INTERNATIONAL OCEAN SHIPPING: CURRENT CONCEPTS AND PRINCIPLES ...... R.O. Goss 141 A STUDY OF THE PHILOSOPHY OF INTERNATIONAL LAW AS SEEN IN WORKS OF LATIN AMERICAN WRITERS ...... Leonard v.B. Sutton 145

BO OK N O TE S ...... 149 FACULTY COMMENT

Why Study International Law? A Decade of the International Legal Studies Program at the University of Denver College of Law VED P. NANDA*

I. INTRODUCTION The faculty decision in 1971 to establish the International Legal Studies Program at the University of Denver College of Law reflected a sound curriculum philosophy. After years of deliberation the faculty opted for a restructuring of its curriculum to allow J.D. students to select an area of concentration during their second year and take a number of courses in that area.' This was a recognition of the emerging reality that the legal profession was becoming more specialized and that the College of Law had a responsibility to prepare lawyers for the future.* Thus, while the teaching of basic skills and doctrine was to be pursued as vigorously as ever and the opportunity for one to be a generalist was to be preserved, the College was also to offer clusters of courses for those who wished to concentrate their studies in one or more areas of the law. These areas included natural resources, international legal studies, business

*Professor of Law and Director, International Legal Studies Program, University of Denver College of Law. 1. REPORT or THE CUmucuLuM CoMMrrE, UNivsarry or DsNvEn COLLEGz Or LAW, May 8, 1968. (Available from Associate Dean John Hanley.) In part, the report stated: The three-year curriculum should be structured to provide all students with an effective general legal background and a speciality at the level of the first degree in law....

The first-year curriculum should be composed of required courses. In the second and third years the students should be required to fulfill area requirements by taking a minimum of courses in specified areas and a minimum of hours in fields of concentration. REPORT Or THE DEAN, UNwvassrry or DzsvER CoutGs or LAw, 1967-68, at 5. The author was a member of that curriculum committee. 2. The curriculum committee observed: "It is assumed the Bar expects us to produce basically trained generalists who can develop themselves in the traditional mold if they desire. But the curriculum must also recognize the trend to specialization and provide for it." REPORT OF THE DnN, Umwssrry or D.zsm COLLEaGE o LAw, 1967-68, at 5. DEN. J. INT'L L. & POL'Y VOL. 11:1 planning, urban affairs, administration of justice, and the emerging emphasis in advocacy skills.' A year before the establishment of the International Legal Studies Program, the College Bulletin stated that the objective of the Program was "to prepare law students [for] an effective role in the contemporary interdependent world of business, federal agencies and international organizations."' The course offerings then included international law, international organizations, comparative law, international business transactions, international protection of human rights, law of the sea, international regulation of the environment, and international conflict resolution. The Bulletin noted that the "leading associates" of the Program were several "experts in the fields of international business, international organizations, and international diplomacy,"' including lawyers, professors and international businessmen. Only a few of the several factors which shaped and influenced the direction of the Program both at its inception and since then can be noted here. First, Denver was fast becoming a mecca of transplanted Eas- terners, many of whom had practiced international law and international business for several years as corporate counsel or private practitioners, and who were willing to graciously share their talents, experience and expertise as adjunct faculty at the law school. Second, Denver was becoming increasingly attractive as a location for national and international headquarters of many businesses and industries. Third, the faculty decided to vigorously support dual degree programs.' For example, a student could pursue a J.D. degree and an M.A. or Ph.D. in international studies at the Graduate School of International Studies (GSIS) or an M.B.A. at the Graduate School of Business and Public Management. Both schools are among the most highly regarded schools in the country in their fields and enjoy high visibility and distinction. A year after the Program was instituted, the Bulletin was instructive in indicating the nature and scope of the Program. Course offerings expanded from one to three courses in transnational business transactions. "In addition," the Bulletin stated, "independent study and tutorials are available in several areas, including space law, the law of international agreements, international conflict resolution and U.S. foreign policy and the United Nations.'" The Bulletin added that the Program "is designed to provide the student with an opportunity to pursue his interest in international law, international organizations, transnational business and re-

3. The College decided in the mid-1970's to offer four areas of emphasis: advocacy skills, business planning, international legal studies, and natural resources. For the latest information regarding these programs available for J.D. students, see UNIVERSrY oF DENVER BULLETIN, COLLEGE OF LAW, 1981-82, at 20-21. 4. UNwERSITY OF DENVER BULETIN, COLLEGE OF LAW, 1971-73, at 17. 5. Id. 6. See, e.g., Urvxnsrrv or DENVER BULLETIN, COLLEGE OF LAW, 1968-70, at 15. 7. UtNnarrv or DENVER BULLETIN, COLLEGE Or LAw, 1972-74, at 15. 1981 INTERNATIONAL LEGAL STUDIES lated areas."' The Bulletin further stated: Each student in the International Legal Studies Program works on an independent research project leading to a publishable article for the Denver Journal of International Law and Policy or some other law review. % Students in the Program enroll each year at the end of their third quarter. They are required to take at least 21 quarter hours (including International Law) in the area, but are also permitted to take not more than 15 quarter hours of courses in other departments of the University such as business, economics, international studies, history, sociology, etc. The faculty includes several members of the regular faculty at the College of Law and at other schools and departments of the Univer- sity as well as several practicing attorneys. The director of the Pro- gram is Professor Ved P. Nanda of the law faculty.9 It is also necessary to place this discussion in the context of the rapid changes that have occurred on the international scene in relations among nations and peoples in the past few decades. Global problems have emerged which require international solutions. The widening gap between the rich and poor countries of the world, poverty and hunger, economic exploitation, the constant threat of nuclear catastrophe, ocean pollution, and violations of human rights are problems which threaten the future of 'mankind. Their solutions require innovative thinking and international cooperative action. A great challenge of our day is to devise appropriate international, regional, and national mechanisms capable of coping with the interdependence of peoples and nations of the world and the conse- quent internationalization of life brought about by the economic, social, and technological advances of the last few decades. The existing body of international law provides an inadequate framework for responding to this challenge. For it to accomplish its necessary task, existing international legal norms must be strengthened, new international organizations must be created and, most importantly, greater international understanding must be achieved. The public international issues of war and peace, economic development, social justice, human rights, and protection of the physical environment are being examined continually to extend the rule of law in the international community. Cooperative efforts of the United Nations, regional organizations, governmental agencies, nongovernmental organizations, and private institutions have successfully promoted agreements on topics as diverse as the probing of outer space, peaceful uses of the Antarctic, deterrence and punishment of air hijackers, and control of international traffic in narcotic drugs. Much more needs to be done, however, to ensure for example, that ocean resources remain the "common

8. Id. at 14. 9. Id. at 15. DEN. J. INT'L L. & POL'Y VOL.. 11:1 heritage of mankind," that the existing international dispute settlement mechanisms are strengthened and are widely used, and that the mad race to build deadly nuclear arsenals is halted. In the private sector, international trade and foreign investment con- stantly expand as travel and migration increase. The activities of multinational enterprises as well as the needs of private individuals are producing new demands on international law. These developments in turn are causing reevaluation of the relationships between domestic and international legal systems. It is in this broader context that the role of the International Legal Studies Program in the law school curriculum should be viewed. A major purpose of the Program is to equip students to be able not only to respond to these significant changes in both the public and private fields of international law, but also to provide creative initiative in fashioning new international institutions and structures to deal with these challenges and problems. The College has continually augmented and updated the Program to provide in-depth and timely instruction that is vital to such an endeavor. The credit for this forward-looking approach is shared by the administration as well as the faculty. At the university level, former Chancellor Maurice Mitchell and the present Chancellor Ross Pritchard are both well known for their strong commitment to human dignity and world order. Both have demonstrated a keen interest in developing first rate programs in international studies and in international law. At the law school, Robert B. Yegge, Dean of the College of Law from 1966 to 1977, gave unfailing support to the Program during the planning stage in the late 1960's and through its infancy and early formative years. His successors, Acting Dean Lawrence Tiffany (1977-78) and Daniel Hoffman, Dean since 1978, have been equally firm and forthcoming in their encouragement, guidance and assistance to the Program. The College of Law faculty has been helpful in building and strengthening the curriculum and in hiring several new full-time faculty with interests in international law. The Program attracts a large number of applicants nationwide. Of the 1980-81 first year class at the College of Law (180 students selected out of nearly 1800 applicants)" 62 students out of 140 who responded to a questionnaire gave the International Legal Studies Program as an important reason for their choice to enroll at the University of Denver law school for their legal education." Two thirds of the entering class is from outside Colorado.'s A decade after the establishment of the International Legal Studies

10. The record is on file with Ms. Claudia Tomlin, Admissions Officer of the College of Law. 11. The questionnaire was administered by Professor Lucy Yee, Chairperson, Admis- sions Committee. 12. See REPoRT oP THE DEAN, COLLEGE or LAW, 1980-81, at 1. 1981 INTERNATIONAL LEGAL STUDIES

Program is an appropriate time to reflect*on that decade and to discuss the prospects for the future. Six components of the program will be dis. cussed in the following sections: (A) The Academic Program; (B) The Denver Journal of InternationalLaw and Policy; (C) The Denver Inter- national Law Society; (D) The Myres S. McDougal Distinguished Lecture on International Law and Policy, Annual Regional Conferences of the American Society of International Law, and The Jessup International Moot Court Competition; (E) Internships, Externships, and Career Op- portunities; and (F) Continuing Legal Education.

I. COMPONENTS OF THE PROGRAM A. The Academic Program

The Program offers a broad range of courses in what have been traditionally described as public and private areas. To illustrate, in addition to the introductory international law course, seminars and courses are offered in comparative law, international organizations, international conflict management and resolution, international protection of human rights, international regulation of the environment, and law of the sea. Also, in addition to international economic law and seminars in international business transactions-including policies and institutions, international capital formation and security regulations, licensing and international business transactions in Latin America, with special reference to Mexico-there are course offerings in immigration and nationality, taxation of transnational enterprises, and international transportation law. Related courses are also available in admiralty and aviation law. Indepen- dent study areas in the recent past have included space law, the law of international agreements, international law and U.S. foreign policy, the law of transnational enterprises, the law of the European Community, international energy law, international resources law, and international labor law. The introductory international law course is offered each year in the day division during the spring quarter when first year students are permitted in their third quarter to take one elective course. For the evening division students the course is offered during the winter quarter each year. Since the introductory international law course is either required or highly recommended for other courses or seminars in the Program and because it also constitutes one of the requirements for membership on the Denver Journal of InternationalLaw and Policy, first year day division students interested in the" Program usually begin it by enrolling in the course during their third quarter. However, to accomodate the interests of those students who are unable to take the course during the spring quarter, the course is offered during other quarters as well: it was offered each quarter last year with an overall enrollment of 130 students. The Associ- ate Dean for Academic Affairs, James Wallace, attempts to schedule every course and seminar offered in the Program at least once in two years to allow all students to take courses of their choice. Some courses DEN. J. INT'L L. & POL'Y VOL. 11:1 are offered more frequently because of student interest and need. The faculty for the Program consists of several full-time faculty members and a large number of adjunct faculty who teach and supervise specific projects. Full-time faculty members include Professor William Al- tonin who teaches Admiralty; Professor William Beaney whose primary interest is U.S. foreign policy and international law and who is a member of the advisory board of the Journal; Professor Murray Blumenthal who teaches international conflict management and resolution; Professor James Branch who teaches the introductory international law course and advises the Jessup moot court team; Professor John Carver who is a guest lecturer in the law of the sea seminar; Professor Al Coco, Director of the library who lectures on research in international law; Professor Paul Dempsey who teaches international business transactions, international economic law, and international transportation law; Professor Ved Nanda who teaches the introductory international law course, comparative law, and several other courses; and Professor Howard Rosenberg who super- vises internships and externships in international law. Among the adjunct faculty, those who have taught in the recent past include corporate coun- sellors, practitioners, and those serving in the federal government. They include Harold Bloomenthal, Roland P. Campbell, the Hon. Zack E. Chayet, David Cordova, Jonathan C.S. Cox, J. Scott Hamilton, Robert Heiserman, Donald W. Hoagland, James E. Nelson, Robert S. Rich, Har- ley W. Shaver, Peter Sussman, and James P. Vandello. The faculty of the Program, in conjunction with the Program's advisory board consisting of a group of community leaders with varied interests, practice in international law, international business, and foreign affairs, and meet each year to evaluate the curriculum as well as the extracurricular components of the Program. For a student who wishes to enroll in the Program as an area of concentration, twenty-one hours are required in the Program, including work on the staff or editorial board of the Journal as well as independent research and writing."' Students are encouraged to submit their seminar papers or independent research products for publication consideration in the Journal or some other international law review. In addition to the Journal,student pieces have been published in many other international law reviews. Scholarly publications of the full-time faculty are impressive indeed." A special publication of the International Legal Studies Pro- gram last year was a book entitled the Law of TransnationalBusiness

13. See UNivEnsrry OF DENVER BULLETIN, supra note 3, at 21. See generally UNIvERsrrY oF DzNWvR CoLLEG op LAW, INTERNATIONAL LEGAL STUDIES PROGRAM (1980). The program brochure may be obtained by writing to Mrs. Nancy Nones, Administrator, International Legal Studies Program, University of Denver College of Law, 200 West 14th Ave., Denver, Colorado 80204, or by calling (303) 763-3427. 14. For a list of publications and lectures during 1980-81 by the full-time faculty involved in the Program, see Appendix, infra. 1981 INTERNATIONAL LEGAL STUDIES

Transactions,' which was a joint product of many full-time and adjunct faculty at the College of Law. The Program is the benefeciary of the royalties from that book. In addition to the College of Law library which houses the needed basic research materials including selected United Nations and European Community documents and serials, the Denver Public Library is a depos- itory for all the United Nations materials and government documents. The public library staff, especially the head of the documents division, Robert Shaklee, and the person in charge of U.N. documents, Sue Yonida, have provided much help and assistance to the many students and faculty engaged in research projects. In addition, Penrose library, located on the main campus of the University of Denver, also provides additional materials on international law. Each year, prizes are awarded for best student writing on international law topics. Also, a number of students take advantage of the several summer law programs and institutes abroad. The two dual degree programs which have proven to be the most popular with students interested in the Program include one with the Graduate School of International Studies (GSIS) and the other with the Graduate School of Business and Public Management. Several students from GSIS and other colleges and departments of the University are permitted to enroll in the introductory international law course as well as in other courses and seminars as space permits. The academic program offers sufficient depth and variety of courses to prepare an interested student for career options in transnational business, international law practice, work in a governmental agency or an intergovernmental or nongovernmental organization, or teaching. Perhaps a major strength of the College is that the several areas of emphasis available here are not compartmentalized; hence, a student can conceivably concentrate in international law with enough courses in business planning and/or natural resources to acquire sufficient skills for entry in the international energy or natural resources area or in a corporate setting involving transnational operations and interests. B. The Denver Journal of InternationalLaw and Policy With this issue, the Journal enters its second decade of publication. The last decade has witnessed the Journal progress from a fledgling effort on the part of a handful of students e to a highly respected vehicle for the presentation of commentaries on topical issues of international law and policy. As a forum devoted to the dissemination of scholarly articles, the

15. THE LAW OP TRANSNATIONAL BUSINEss TRANSACTIONS (V. Nands ed. 1981). 16. The Denver Journal of InternationalLaw and Policy came into existence largely through the energy, dedication, and hard work of students Jonathan C.S. Cox, Jeffrey 0. Brown, Victor L. Abbo, and Robert G. Heiserman, and several friends of the Program who in the early years made its publication possible through their gracious financial support. DEN. J. INT'L L. & POL'Y VOL. 11:1

Journal during its short span of existence has published articles by some of the best known scholars and practitioners in international law in the United States and abroad. Also, while students assume responsibility for the entire publication process, the Journal has a group of distinguished international law scholars and practitioners who serve on its Board of Ad- visors. The Journal is also firmly committed to encouraging and promoting student writing, thus providing the student with an opportunity to write Comments on topical treaties and cases, and Recent Developments on new areas of international law. The first issue of the Journal appeared in the fall of 19711" and was dedicated to Myres S. McDougal." As a continuing tribute to this distinguished scholar and teacher, the Journal publishes addresses from the Myres S. McDougal Distinguished Lecture in International Law and Pol- icy, which was established in 1977 as an annual lecture series at the Col- lege of Law."s In addition to publishing a wide array of essays, the Journal also publishes shorter, informal articles written by prominent scholars in public and private international law in a separate category entitled "Faculty Comments."3 0 The Journal frequently publishes symposia and conference proceedings on special topical issues which have included Expropriation,1 Transnational Control of Narcotics," Prevention and Control of Interna- tional Terrorism,"' Mexican Foreign Investment Laws,'4 Tax and Non- Tax Aspects of International Business Transactions," Soviet-American

17. See 1 DEN. J. INT'L L. & POL'Y 1 (1971). In the first year of its existence, the Jour- nal was published only once. The following year, two issues were printed. The two-issue-a- year practice continued until Volume 10, when three issues were published. (A third special issue, however, also appeared in Volumes 5, 6 & 8.) 18. Professor McDougal's policy-oriented approach is reflected in the Journal's title, Denver Journal of InternationalLaw and Policy. 19. See Ferguson, Global Human Rights: Challenges and Prosiects, 8 DEN. J. INr'L L. & POL'Y 367 (1979); Hazard, Soviet Tactics in InternationalLawmaking, 7 id. at 9 (1977); and Korbel, Detente and World Order, 6 id. at 9 (1976); Moore, Charting a New Course in the Law of the Sea Negotiations, 10 id. at 207 (1981). This year's speaker will be Professor W. Michael Reisman. 20. Two of the Journal's most recent Faculty Comments are by a judge and former judge of the International Court of Justice. See Elias, New Perspectives and Conceptions in Contemporary Public InternationalLaw, 10 DEN. J. Irr'L L. & POL'y 409 (1981), and Jes- sup, Revisions of the International Legal Order, 10 id. at 1 (1980). Many of the Journal's articles have received notoriety in other forums. For example, Heinz Dawid's article in Volume 9:2 entitled "Trademark Protection in the People's Repub- lic of China" appeared in Volume 2, No. 2 of the National Law Review Reporter. Judge Jessup's article in Volume 10:1 is being translated into French and will appear in l'Annuaire Francois de Droit International. 21. 2 DEN. J. INT'L L. & POL'Y 125 (1972). 22. 3 id. at 275 (1973). 23. Id. at 279 (1973). 24. 4 id. at 1 (1974). 25. 5 id. at 1 (1975), also noted in 64 A.B.A.J. 490 (1978). 1981 INTERNATIONAL LEGAL STUDIES

Trade in a Legal Perspective," The Middle East Consensus Project, 7 Water Needs for the Future,"3 Domestic and International Aspects of En- ergy,21 Human Rights,'0 Legal Status of the Palestine Liberation Organi- zation,8 and Global Climatic Change."2 Selection for membership on the Journal is based upon the twin criteria of an interest in international law and high academic performance. Candidates are invited to participate in an extensive training program. Promotion to staff is based upon the successful completion of that program and the submission by each candidate of a paper of publishable quality. In the past, the editors of the Journal have presented programs at the International Law Journal Roundtable, a two day symposium devoted entirely to the operations of international law reviews which is held each year at the Association of Student International Law Societies' national conference in Washington, D.C. The Journal's presentation was on candidate training programs at the 1981 conference, and this year it will focus on standard international legal citations. The Journal is published three times a year and attracts some of the best students at the law school on its staff. It is indexed and abstracted in Current Index to Legal Periodicals, Current Law Index, Index to Fed- eral Tax Articles, Index to Foreign Legal Periodicals,Index to Legal Pe- riodicals, InternationalPolitical Science Abstracts, Law Review Digest, Legal Contents, and Public Affairs Information Service, and is distrib- uted world wide to libraries; corporations, law firms, and individuals.

C. The Denver InternationalLaw Society

Since the inception of the Program, the Denver International Law Society has been an integral part of the Program. The International Law Society (ILS) is one of the more than one hundred member chapters of the Association of Student International Law Societies (ASLIS), the student arm of the professional American Society of International Law (ASIL). Through its activities, ILS provides first year students an initial opportunity to become acquainted with and involved in the International Legal Studies Program. Many of these students subsequently become candidates for membership on the Denver Journal of InternationalLaw and Policy at the end of their first year. In addition to promoting interest in the Program, the ILS also provides an important service to the entire law school.

26. 5 DEN. J. INT'L L. & PoL'v 217 (1975). 27. Id. at 373 (1975). 28. 6 id. at 225 (1976), also noted in CoLO. Bus. 54 (1977). 29. 8 DEN. J. INT'L L. & POL'Y 1 (1979) (joint issue with the Denver Law Journal). 30. 8 DEN. J. INT'L L. & POL'Y 517 (1979) (special issue). 31. 10 id. at 221 (1981). 32. Id. at 463 (1981). An upcoming issue will focus on international terrorism. DEN. J. INT'L L. & POL'Y VOL. 11:1

To illustrate, ILS, perhaps more than any other organization at the law school, has been instrumental in. bringing internationally acclaimed scholars to the College. This has been accomplished largely through the Myres S. McDougal Distinguished Lecture, and the annual regional conference of the American Society of International Law which the College hosts each year. In addition, the ILS sponsors a noon-hour speaker series throughout the school year. Three or four programs are presented each quarter, covering a wide variety of topics. This year, for example, these topics have ranged from Canadian-American transboundary pollution, the Polish crisis, and transnational terrorism, to career opportunities in international law, and transnational litigation. Also, several panel discussions are presented on varying topics of current interest. Speakers have included the Dalai Lama, Judges of the International Court of Justice, ambassa- dors, United Nations officials, and distinguished jurists, statesmen and practitioners from the United States and abroad. Every year since 1966, the College of Law has hosted the Regional Conference of the American Society of International Law. Since 1970, when the ILS program was established, the International Law Society has been the host organization for the Conference which typically is a one to two day program featuring keynote speakers and panel discussions. In 1981, the Conference focused on U.S. Immigration and Naturalization policies. This year, in conjunction with the McDougal lecture which will be given by Professor W. Michael Reisman of Yale, the Conference will address international aspects of terrorism. During the last few years, the Society has been able to send several students to the ASIL/ASILS National Conference in Washington, D.C. Not only are these students able to take advantage of attending the many talks and symposia featured at the Conference, but they are also given an invaluable opportunity to meet many of the most distinguished scholars and practitioners in the field of international law. ILS serves as an important support function for the College's Jessup International Moot Court team. Each year it organizes and implements the intraschool competition, by which the team representing the College at the regional competition is selected. The College and the Society have hosted the Jessup regional competition three times in the past and look forward to serving again as the host school. This year's team was the win- ner of the Rocky Mountain Regional competition in which ten teams from seven states participated at the University of Colorado on March 5- 6, 1982. Not all of the Society's activities are, however, educational or service oriented. Twice each year, ILS hosts an International Dinner, featuring a particular national or regional cuisine, prepared entirely by ILS members. These dinners are invariably well attended and provide students, faculty and Denver area practitioners an opportunity to become better acquainted in a nonacademic, nonwork-related atmosphere. 1981 INTERNATIONAL LEGAL STUDIES

The Foreign Language Club is a relatively new activity of the ILS. Several Fridays each quarter ILS members and foreign students, as well as students from the Graduate School of International Studies, get together informally to socialize and practice speaking foreign languages. The Language Club serves as an important liason between the two schools. Also, several ILS members are pursuing joint degrees in law and international studies. The International Law Society, as the largest and most active student organization at the law school, continues to provide an invaluable service both to the International Legal Studies Program and to the larger law school community. D. The Myres S. McDougal Distinguished Lecture on International Law; Annual Regional Conference of the American Society of Interna- tional Law; The Jessup International Moot Court Competition

These special projects bring visibility and distinction to the College of Law and the Program. The lecture series since 1977 has attracted emi- nent scholars, such as Dean Josef Korbel (GSIS-former ambassador from Czechoslavakia), Professor John Hazard (Columbia), Professor Clyde Ferguson (Harvard), Professor Gustavo Lagos (Chile), Professor John Norton Moore (Virginia), and Professor W. Michael Reisman (Yale). Since this is the only named lecture series at the College of Law, attendance at the lectures is not confined to students and faculty, or to the law school and the University; the audience includes a fair representation of the community. Similarly, regional conferences each year attract large audiences. The Conference on "Water Needs for the Future," the most well-attended conference thus far, had over 500 registrants. Proceedings and papers from these conferences are usually published in the Journal as special symposia issues, and three were published as hard cover books.'8 The Jessup Moot Court Competition provides selected students an opportunity to participate in this prestigious international competition. As noted earlier, our team placed first in the 1982 Rocky Mountain Re- gional Competition and therefore will compete in the finals in Washing- ton later this year. E. Internships, Externhips, and Career Opportunites

Internships and externships in international law are part of a vital program in clinical legal education at the law school. Internships are usually arranged with Denver-based corporations engaged in trananational

33. GLOBAL HUMAN RIGHWrS: PUBLIC POLICIES, COMPARATIVE MEASURES, AND NGO STATmIES (V. Nanda, J. Scarritt, & G. Shepherd eds. 1981); WATER NEEDS FOR THE FUTURE (V. Nanda ed. 1977); WORLD CLIMATE CHANGE: THE ROLE OF INTERNATIONAL LAW AND INSTI- TUTIONS (V. Nanda ed. 1982). DEN. J. INT'L L. & POL'Y VOL. 11:1 business such as Manville and Samsonite, international banking departments, federal offices in Denver such as the Immigration and Naturaliza- tion Service, and law firms with international practice. Externships allow students to arrange a quaiter of approved practical work taken elsewhere in the United States or abroad. Examples of such arrangements are: federal government agencies in Washington, D.C.; U.S. Senate and House Committees; and multinational enterprises, such as the Holiday Inn located in London. A proposed externship program with the International Energy Agency in Paris is currently under consideration. Thus, under faculty guidance and with the prior approval of the Director of the Clinical Legal Education Program, opportunities are provided to selected students to integrate their theoretical skills and their classroom work with research and work in a practical setting. Students who graduate with emphasis in international law and those with a J.D. and an M.A. or Ph.D. in international studies have found many kinds of career opportunities with multinational enterprises, law firms, governmental agencies, international intergovernmental and nongovernmental organizations, and in teaching. At present, alumni of the program are located throughout the country and in many countries abroad. F. Continuing Legal Education Activities (CLE) The Colorado CLE and the College's Program in Advanced Profes- sional Development (PAPD) have arranged classes and programs every year on selected international subjects in international law. These have usually included classes and seminars in international business which allow attorneys to sharpen their skills in selected areas of international law. Students are allowed free admission to these programs. Mark Caldwell, Esq., Acting Director of the CLE, with the assistance of the full-time and adjunct faculty of the Program, has been primarily instrumental in arranging these programs. III. CONCLUSION The last decade has been a period of growth and excitement for the Program. It is anticipated that while the emphasis in the next decade will be on strengthening all the components discussed earlier, selected areas will be given special attention. One such area is research. It is anticipated that each year special research projects will be undertaken under the auspices of the Program. Other areas of emphasis include: special scholar- ships for students to attend institutes and summer law programs, for example the Hague lectures; special funds to encourage and reward student writing and scholarship; and the eventual institution of a graduate degree in international law. The Program has a. promising future. APPENDIX

Professor William M. Beaney was the author of four sections for the book Guide to American Law, scheduled for publication by West. The sections authored by Professor Bea- ney are "Electronic Eavesdropping," "Avoiding Constitutional Issues," "National and State Power," and "The Commerce Clause." Professor James A. Branch presented lectures on evidence for C.L.E., the American Academy of Judicial Education, and the Colorado Defense Lawyers. He is an instructor for the National Institute of Trial Advocacy. Professor Murray Blumenthal is acting as a consultant for the Denver Research Insti- tute research team on a National Institute of Justice funded evaluation of central intake systems in selected jails throughout the country. Professor John A. Carver, Jr. is a member of the American Bar Association Special Committee on Energy Law, which completed and published Need for Power and Choice of Technology, a study of utility regulatory procedures in the 50 states for the U.S. Depart- ment of Energy. As a member of the National Petroleum Council and its Committee on Environmental Conservation, he is working on a study for the Secretary of Energy on environmental conservation and its impact on cost and availability of petroleum products and natural gas. An article, "Intergovernmental Relations and Energy Taxation," was published in the Denver Law Journal. Professor Carver is currently Special Master for the Supreme Court of the United States in Texas v. Oklahoma, No. 85 Orig., a dispute concerning the boundary of the two states near the Denison Dam on the Red River. Professor Alfred J. Coco received a $6,000 contract from the Bureau of Land Manage- ment to develop a workbook, storyboard, and problems for a program, "Finding the Law," to be used as a training aid for the B.L.M. cadastral and mapping staff. He also authored "How to Avoid Future Shock: Preparing Librarians for the Twenty-First Century." The paper was presented at the annual meeting of the American Association of Law Libraries in Washington, D.C. It was taped for A.A.L.L. and will be sold by Mobil Tape Corporation. The paper will also be published in the Law Library Journal. Professor Paul S. Dempsey authored the articles, "Oil Shale and Water Quality: The Colorado Prospectus under Federal, State, and International Law," which was published by the Denver Lw Journal. The Denver Journal of InternationalLaw and Policy published his article on "Oil Pollution by Ocean Vessels-An Environmental Tragedy: The Legal Re- gime of Flags of Convenience, Multilateral Conventions, and Coastal States." "Erosion of the Regulatory Process in Transportation-The Winds of Change" appeared in the ICC Practitioners'Journal. Additionally, he wrote the chapter, "Foreign Trade and Economic Injury: A Survey of U.S. Relief Mechanisms," which appeared in the book Transnational Legal Problems. The Transportation Law Institute included a chapter authored by Profes- sor Dempsey entitled "The Experience of Deregulation: Erosion of the Common Carrier System." He presented "Congressional Intent and Agency Discretion ... Never the Twain Shall Meet- The Motor Carrier Act of 1980" at the annual meeting of the Motor Carrier Lawyers' Association.' It will be published in the Chicago-Kent Law Review. His paper, "The Experience'of Deregulation," was presented before a seminar entitled "Carrier Liabil- ity in an Evolving Regulatory Environment: Claims and Antitrust," sponsored by the Trans- portation Law Institute. He also presented "United States Producers' Relief from Competi- tion by Lower-Priced Imports: A Survey of Statutes and Applications" for C.L.E. He received the Hughes Foundation Award for research on coal slurry transportation. He has on two occasions delivered testimony before the U.S. House Committee on Public Works and Transportation. Professor Nanda was responsible for the conflicts of law section in the Annual Survey of Colorado Law. In addition, he was the co-editor of Global Human Rights, published by Westview. He also edited The Law of TransnationalBusiness Transactions, published by Clark Boardman. He was author of the chapter, "Self-Determination Outside the Colonial 14 DEN. J. INT'L L. & POL'Y VOL. 11:13

Contest: The Birth of Bangladesh in Retrospect" for the book Self-Determination: Na- tional, Regional and Global Dimensions. Professor Nanda edited the book, World Climate Change: The Role of InternationalLaw and Institutions, which will be published by West- view. In August 1981, he presented a paper to the Tenth Conference on Law of the World entitled "Graduate Legal Education in the United States-An Appraisal." The Hofstra Law Review published his article, "World Refugee Assistance: The Role of International Law and Institutions." Nanda completed a book review, "International Law and Policy of Human Welfare," for the Denver Journal of InternationalLaw and Policy. His articles, "Interna- tional Law" and "International Regional Organizations," appeared in Collier's Year Book. Worldview published "Humanitarian Military Intervention." Professor Howard I. Rosenberg completed the book Procedures II: Materials which is presently being used in the Post-Trial Procedure course. Professor Rosenberg is writing a book entitled Creditor-DebtorRelations: Law, Practice,and Procedurein Colorado which has been accepted for publication by Continuing Legal Education in Colorado, Inc. In June 1981, at the University of Atago in New Zealand, he presented a paper, "A View From the Bridge," which reflected an American perspective of law and legal education in New Zea- land. His "Outline and Cases on Venue" has been published by Continuing Legal Education in Colorado, Inc. and his "Outline on Creditor's Remedies and Consumer Law" has been published by the Colorado Bar Review. ARTICLES

Freedom to Travel: Is the Issuance of a Passport an Individual Right or a Government Prerogative? PAUL LANSING*

I. INTRODUCTION An individual's right to freedom of international travel has been overwhelmingly linked to his possession of a passport in the recent past.' The passport has thus become an increasingly important document since it was first introduced. Its importance has been further enhanced by the technological innovations which have considerably decreased the time element in travel to the point where man can virtually span the globe in a matter of hours.' The history of the freedom to travel has been somewhat obscure, varying from an early proclamation promoting the right of free travel to more recent instances wherein the right to free international travel has been limited for national security and foreign policy reasons. One instance of the latter in the United States is the recent case involving Philip Agee, a U.S. citizen and former employee of the Central Intelligence Agency (CIA).$ Agee, a resident of Hamburg, West Germany at the time the case began, was a leading critic of the CIA's clandestine operations throughout the world. He had written and spoken extensively attacking American intelligence efforts, and had purportedly exposed the identities of certain undercover CIA agents.' Agee had been issued a U.S. passport in 1978; however, being aware of Agee's activities, the U.S. De- partment of State moved to revoke it on December 23, 1979. This case

* Associate Professor, College of Business Administration, University of Iowa. B.A., City University of New York, 1968; J.D., University of Illinois, 1971; Diploma in Interna- tional Law, Stockholm University, 1973. The author wishes to acknowledge the valuable assistance of Ma. Cathy Jones, J.D. Candidate, University of Iowa College of Law, in the preparation of this article. 1. D. TURACK, THE PASSPORT IN INTERNATIONAL LAW 1 (1972). 2. Id. at XV. 3. Agee v. Vance, 483 F. Supp. 729 (D.D.C. 1980), afl'd sub nom. Agee v. Muskie, 629 F.2d 80 (D.C. Cir. 1980), reu'd sub nom. Haig v. Agee, U.S. __, 101 S.Ct. 2766 (1981). 4. 629 F.2d at 81. DEN. J. INT'L L. & POL'Y VOL. 11:15 brought up a number of questions concerning an individual's right to freedom of travel and whether it is protected by the U.S. Constitution. This issue and others will be discussed in this article.

II. HiSTORIcAL ASPECTS OF THE FREEDOM TO TRAVEL

Originally, under the writ of Ne Exeat Regno,5 the British Crown could restrain a subject from leaving the realm by providing that one could leave the country only if royal permission had been granted in the form of a license. This was a means of controlling the exit of individuals from the country by the King and thereby enforcing feudal duties and services." However, in 1215, clause 42 of the Magna Carta provided acknowledgement of a distinct right to travel: "It shall be lawful in the future for anyone to leave our kingdom, and to return safe and sound, by land and by water, saving the allegiance due to us, except for a short space in time of war. . ." Contrary to this acknowledgement, however, succeeding kings retained the discretionary power to issue licenses to those who wished to travel. But with the ascendance of the theory of the natural rights of the individual, the discretionary power of the King to require travel licenses diminished substantially.6 By 1607 the writ was no longer in general use except when used as an equity instrument to insure the whereabouts of debtors and defendants. s The British travel licenses required by the writ are the origins of today's passports. In the United Kingdom, the passport traditionally functioned as a letter of introduction to foreign governments identifying the bearer as a U.K. citizen. However, it now has assumed an additional function in that country by also serving as an exchange control voucher. 18 Un- less a person can produce a passport, banks will not issue foreign currency to that person. Thus, severe limitations are imposed on the person not in possession of a passport. Another historical example of the use of passports is the case of In- dia. India's experience is quite different from that of the United King- dom. Until very recently, India lacked any formal regulation governing the granting of passports to persons intending to leave the country, relying to a large extent on American jurisprudence for guidance." Prior to 1967, a passport was not required to leave the country. But since it was and is a prerequisite for entry in other countries, a passport was a practi-

5. Williams, British Passports and the Right to Travel, 23 INr'L & Coup. L.Q. 642, 644 (1975). 6. Id. 7. MAGNA CaRTA § 42 (1215). 8. Parker, The Right to Go Abroad: To Have and to Hold a Passport, 40 VA. L. Rav. 853, 867-68 (1954). 9. Note, The Right to Travel and the Loyalty Oath: Woodward v. Rogers, 12 COLUM. J. TRANSNAT'L L. 387, 389 (1973) [hereinafter cited as Note, Right to Travel). 10. Williams, supra note 5, at 651. 11. D. TURACK, supra note 1, at 7. 1981 TRAVEL: RIGHT OR PREROGATIVE? cal requirement to enable one to travel freely. The controversy whether a citizen of India had the right to travel was determined in 1967 when the Supreme Court of India decided that the citizen enjoyed such a right.12 In response to this decision, the Indian government passed the Passport Act of 196715 which made the passport a statutory requirement for free travel and regulated the granting of passports. By this enactment, the Indian government had begun to exercise its discretion over the travel rights of individuals in its country. The first American passport appeared on July 8, 1796, as a letter of introduction to U.S. officials abroad."' A passport was not required by law, but rather served as a privilege to citizens. Until World War I, the American passport was thought to serve three main purposes. First, it was evidence to both U.S. and foreign officials that the bearer was an Ameri- can national. Second, it contained a request that the bearer be given aid and protection by foreign governments in case of need. Third, the national abroad who held a passport was provided greater assistance by the U.S. government than one who did not, which meant that the U.S. government was more likely to offer assistance to citizens who held a passport."6 Today, however, only the first of these purposes remains valid since international law has recognized that diplomatic protection is not contingent upon the possession of a passport.16 Today, in addition to serving as a convenience to travellers, the American passport has assumed a more important role. It presently serves as an exit control mechanism and an important foreign policy instrument." In exercising discretion over the issuance of passports, the U.S. government is directly able to restrict the foreign travel of American nationals since gaining entrance to another country generally requires a valid passport. Except for a brief period during World War I when travel required possession of a passport, prior to May 27, 1941 it was not illegal for U.S. citizens to leave their country without a passport."0 The passport requirement was intended to apply only during wartime and to end with the coming of peace. In 1941 Congress enacted legislation extending the wartime passport requirement to include "national emergencies""' which President Roosevelt declared to exist in the same year. Following the coming of peace in 1945, the advent of the Cold War prevented the repeal

12. Id. at 8. 13. Comment, The Right To a Passport, 7 INDIA J. INT'L L. 526 (1968). 14. Note, Right to Travel, supra note 9, at 392. 15. Ehrlich, Passports, 19 STAN. L. Rev. 129 (1966). 16. Turack, Selected Aspects of International and Municipal Law Concerning Pass- ports, 12 WM.& MARY L. Rev. 805, 818 (1971). 17. Note, Passports and Travel: Towards a Rational Policy of Area Restriction En- forcement, 8 HARv. J. LEGIS. 518, 527 (1971) [hereinafter cited as Note, Passports and Travel]. 18. D. TURACK, supra note 1, at 9. 19. Ehrlich, supra note 15, at 131. DEN. J. INT'L L. & POL'Y VOL. 11:15 of the passport requirement. The 1941 statute was replaced in 1952 when Congress passed the Immigration and Nationality Act.20 The Immigration and Nationality Act authorized the President. to impose restrictions on travel during wartime or any national emergency and made it a criminal offense to enter or leave the U.S. without a valid passport.' Hence, the denial of a passport became and today continues to be synonymous with the right to travel abroad. The Secretary of State has the power to grant or to deny the issuance of a passport and therefore has the ability to control the foreign travel of U.S. nationals." The Department of State carries out the function of issuing or denying a passport through its Passport Division." In the early 1950's passports were denied when the Department of State felt that the applicant's travel abroad would not be in the best interests of the United States. Frequently the applicant had no idea what the term "best interests" meant and the Secretary of State, alleging that the issuance or denial of a passport was a function of the foreign affairs power, assumed its 4 actions were nonreviewable.2 Throughout the decade of the 1950's the number of passport restrictions based on national security or foreign policy grounds increased, and the Passport Division began using its discretionary power arbitrarily." Since the issuance of a passport was then deemed to be a foreign policy decision, private citizens could not contest the denials."8 Any private citizen who spoke against U.S. policies or the policies of U.S. allies risked the chance of having his passport revoked. These arbitrary actions, based on the premise that a passport decision is a foreign policy decision, affected basic constitutional rights and therefore. came under the scrutiny of the courts. In Schachtman v. Dul- les,27 the national chairman of the Independent Socialist League was refused a passport solely because the organization was listed as subversive by the Attorney General. The court of appeals held that the right to

20. Immigration and Nationality Act of 1952, § 215, 8 U.S.C. §§ 1101-1503 (1976 & Supp. I1 1979). 21. Id. § 1185 (a)-(b). 22. 44 Stat. 887 (1926), 22 U.S.C. § 211a (1980). A U.S. national is defined as "a citizen of the United States or a noncitizen owing permanent allegiance to the United States." 22 C.F.R. § 51.1(d) (1981). 23. 22 C.F.R. § 51.1-.89 (1981). 24. See generally Hurwitz, JudicialControl Over PassportPolicy, 20 CLRV. ST. L. R~v. 271 (1971); Note, Passport Refusals for PoliticalReasons: Constitutional Issues and Judi- cial Review, 61 YALE L.J. 170 (1952) [hereinafter cited as Note, Passport Refusals]. 25. Hurwitz, supra note 24, at 271. 26. The State Department both refused to renew certain passports and revoked others in its efforts to prevent foreign travel. Ms. Beverly Hepburn's passport was not renewed because she "allegedly engag[edl in the internal affairs of Guatemala." Id. at 274. Paul Robeson had his passport revoked since the Government felt "if Robeson spoke abroad against colonialism he would be a meddler in matters within the exclusive jurisdiction of the Secretary of State." Id. 27. 225 F.2d 938 (D.C. Cir. 1955). 1981 TRAVEL: RIGHT OR PREROGATIVE? travel was a natural right subject to the rights of others and to reasonable regulation under law. A restraint imposed by the Government of the United States upon this liberty, therefore, must conform with the provision of the Fifth Amendment that '[nmo person shall be . . . deprived of... liberty ...without due process of law.' s Since Schachtman was granted an informal hearing prior to the passport denial, the court focused upon the substantive due process question of whether the refusal was arbitrary." The court held that under the circumstances, the denial was arbitrary and thus invalid.30 Similarly, in Aptheker v.Secretary of State,3' ranking members of the Communist party had their passports revoked under section 6 of the Subversive Activities Control Act of 1950,3' which provided that a member of a Communist organization, which has registered or has been ordered to register, commits a crime by either applying for or attempting to use a passport. In effect, the section provided a statutory basis for the denial of passports because of political associations or beliefs. However, the Court found the section "unconstitutional on its face" in that it "sweeps too widely and too indiscriminately across the liberty guaranteed in the Fifth Amendment." 8 This decision effectively eliminated the State Department's ability to withhold passports from Communists and established the rule that one's political persuasion alone could not be employed to justify the Department's actions.8 '

28. Id. at 941. 29. Id. 30. The court acknowledged that in determining whether a decision was arbitrary one must examine all the circumstances. Restraint upon travel abroad might be justified during an emergency, but not during times of normalcy. The court further explained that the mere listing of the Independent Socialist League on the Government's list of subversive groups, coupled with their refusal to justify the listing, must be seen as an arbitrary act, "without a reasonable relation to the conduct of foreign affairs." Id. at 943. 31. 378 U.S. 500 (1963). 32. Subversive Activities Control Act of 1950, ch. 1024, § 6, 64 Stat. 987 (1950). 33. 378 U.S. at 514. Among the reasons for their decision that the Act swept too broadly were the following: (1) the terms of the Act "apply whether or not the member actually knows or believes that he is associated with what is deemed to be a 'Communist- action' or a 'Communist-front' organization," id. at 509; (2). the act applies regardless of whether one believes he or she is associated with a group seeking to further the world communist movement, id. at 510; (3) section'6 "renders irrelevant the member's degree of activity in the organization and his commitment to its purpose ... " id. at 510; (4) the prohibition of section 6 applies without considering the reasons for which the individual wishes to travel abroad, thus prohibiting trips for medical or family reasons, id. at 511; (5) section 6 also applies "regardless of the security sensitivity of the areas in which (the member] wishes to travel," id. at 512; (6) in promulgating the Act, it is clear the Government did not even consider what less drastic methods might be available to achieve their desired goal, id. at 512-13. 34. Arguably, the State Department would still have the power to withhold passports from Communists. But given the criteria upon which the Court based its decision, it is doubtful that an effective act could be drafted and still be constitutional. DEN. J. INT'L L. & POL'Y VOL. 11:15

Further, the Supreme Court in this case ruled that it is unjustifiable to repress the travel rights of a "class of persons" for the sake of national security.38 Therefore, although the State Department may refuse a passport and thereby restrict travel on the basis of national security considerations, its power and discretion in this area have slowly been eroded by the courts. Unless the State Department sufficiently demonstrates the danger to national security, the Department is essentially obligated to issue passports to each applicant. The State Department has been better able to justify passport refusals on behalf of the national interest for area restrictions than for individual or class restrictions. The area restrictions apply to all travellers who desire to travel to "(1) [Al country with which the United States is at war, or (2) A country or area where armed hostilities are in progress; or (3) A country or area in which there is imminent danger to the public health or physical safety of United States travellers."ss Area restrictions are supported by two separate policies. One is that the State Department does not want a U.S. traveller to become stranded in an area where the normal diplomatic services of the United States would not be available. Second, the restrictions prevent U.S. travellers from inadvertently touch- 7 ing off embarrassing foreign incidents by their presence in an area. The government's power to forbid the travel of all citizens to particular geographic areas on the basis of national security was explicitly established by the Supreme Court in Zemel v. Rusk." In that case, the Secre- tary of State refused to validate appellant's passport to travel to Cuba as a tourist for the purpose of informing himself as to conditions there." The Court considered whether the Passport Act of 1926 authorized the Secretary of State to refuse to validate passports of U.S. citizens for travel to Cuba and whether the exercise of the authority was constitutionally permissible. The Court upheld the action of the State Department and held that the language of the Passport Act "[was] surely broad enough to authorize area restrictions."' 0 Zemel, as distinguished from previous cases, involved "foreign policy considerations affecting all citizens."" Thus, the courts have held that area restrictions are authorized but class restrictions are not."'

35. 378 U.S. at 509. 36. 22 C.F.R. § 51.72(a)(l)-(3) (1981). 37. See Note, Passports and Travel, supra note 17, at 520. 38. 381 U.S. 1 (1965). In Zemel, the Court found an "administrative practice sufficiently substantial and consistent to warrant the conclusion that Congress had implicitly approved [area restrictions]." Id. at 12. In addition to the consistent administrative practice, the fact that the 1952 Immigration and Nationality Act left untouched the broad executive power in this area was further support for the Court's acceptance of area restrictions. 39. Id. 40. Id. at 8. 41. Id. at 13. 42. The criminal punishment for visiting a banned country is up to five years imprisonment and/or a $5,000 fine. 8 U.S.C. § 1185(c) (1980). 1981 TRAVEL: RIGHT OR PREROGATIVE?

However, in 1967 the Supreme Court ruled that area restrictions are not criminally enforceable by the State Department. In United States v. Laub," the petitioner was indicted for conspiracy to violate the Immigra- tion and Nationality Act4 ' by arranging for a group of citizens, all of whom possessed valid passports, to travel to Cuba. The Court decided the case solely on the statutory level and concluded that, while the Passport Act of 1926 authorized area restrictions, viQlation of the travel ban did not trigger criminal sanctions. The criminal provisions of the Act penal- ized only departures from the United States without a valid passport, and a valid passport was not rendered invalid by State Department disapproval of travel to the particular destination." As long as the traveller held a valid passport upon his return, he could not be punished for violating the restrictions. Once it was determined that criminal sanctions were not allowed, the State Department turned to administrative sanctions. It threatened to revoke and to not renew an individual's passport until it was assured that the individual would not travel in violation of any restriction." This practice was declared invalid by the District of Columbia Court of Appeals in Lynd v. Rusk." In Lynd, the appellant refused to give as- surances that he would not travel to a restricted area without his passport.48 The Secretary then revoked his passport. In not allowing this revocation, the court held that the "soft support" of congressional silence was insufficient authority upon which to curtail travel to nonrestricted areas "to achieve the objective of restraining travel to restricted areas. '' " The court also stated that the Secretary had sufficient "authority to control the lawful travel of the passport, even though Congress ha[d] not given sufficient authority to control the travel of the person." 80 The combined effect of the above is that the State Department is powerless to demand

43. 385 U.S. 475 (1967). 44. 8 U.S.C. § 1185 (a)-(b) (1976). 45. 385 U.S. at 480-81. 46. 31 Fed. Reg. 13,544 (1966), codified at 22 C.F.R. § 51.74 (1967), states: Travel to, in or through a restricted country or area without a passport or without a passport specifically validated for such travel is ground for revocation or cancellation of a passport and for denial of an application for a passport or renewal of a passport until such time as the Secretary receives formal assurance and is satisfied that the person will not again travel in violation of the travel restrictions. Unauthorized travel to a restricted country or area may also be a violation of 8 U.S.C. § 1185 and/or 18 U.S.C. § 1544 and subject to penalties provided therein. This section was subsequently repealed in 1968. 47. 389 F.2d 940 (D.C. Cir. 1967). 48. Lynd agreed not to use his passport in restricted areas but he reserved the right to travel to those areas without a passport. Id. at 942. 49. Id. at 947. It should be noted that the court sustained the Secretary's authority to deny or to revoke a passport when the sole travel intended by the citizen is to a restricted area. 50. Id. at 947-48. The court reached this conclusion after declaring that the passport is an official document under government seal. DEN. J. INT'L L. & POL'Y VOL. 11:15 that the person travelling refrain from travelling to the restricted region himself, so long as his passport remains safely behind.' These cases have pointed out that to issue and to enforce criminal prohibitions, the State Department must have explicit congressional support. However, as yet, Congress is unprepared to make travel in banned countries a crime. Therefore, travellers cannot be precluded from visiting restricted areas by any punitive consequences." In summary, the authority of the President to exercise discretion over the issuance of passports was established with the passage of the Passport Act of 1926.68 The power was narrowly interpreted until after 1941, when the State Department under the "national emergencies" exception began exercising its authority in a somewhat arbitrary fashion. A number of State Department decisions drew the attention of the courts, prompting judicial review of the Department's actions. As a result of this judicial scrutiny, the area in which the State Department can act with respect to the granting or revocation of passports has been more sharply defined. The case of Philip Agee focuses, on one level, on the power of the Secretary of State to refuse or to revoke a passport on national security grounds. On another level it deals with the right to international travel and the ways in which that right may be limited.

III. THE CASE OF PHILIP AGEE

As noted previously in this article, Philip Agee is a U.S. citizen and former employee of the CIA. He has been a leading critic of the CIA's clandestine operations throughout the world. Through his speaking en- gagements and various publications, Agee has repeatedly identified organizations and individuals in foreign countries as participants in undercover CIA activities or as agents." The State Department informed Agee of its decision to revoke his passport in a letter which said that, because of Agee's stated intention to expose CIA activities and his extensive travel in pursuing those intentions, his actions were damaging to the national security and foreign policy of the United States."6 On these

51. Id. at 948. 52. Hurwitz, supra note 24, at 283. 53. 44 Stat. 887 (1926), 22 U.S.C. § 211a (1980). See note 22 supra. 54. Between 1974 and 1978, Agee had identified hundreds of persons as CIA employees. See generally DIRTY WORK: THE CIA IN WEsTERN EuROPE (P. Agee & L. Wolf eds. 1978); P. AGEE, INSIDE THE COMPANY: CIA DIARY (1975); Agee, "Introduction", in DIRTY WORK 2: THE CIA IN AFRICA (E. Ray, W. Schapp, K. Van Meter & L. Wolf eds. 1979). 55. The important part of the State Department's letter to Agee is stated below: The reasons for the Secretary's determination are, in summary, as follows: Since the early 1970's it has been your stated intention to conduct a continu- ous campaign to disrupt the intelligence operations of the United States. In carrying out that campaign you have travelled in various countries (including, among others, Mexico, the United Kingdom, Denmark, Jamaica, Cuba, and Germany), and your activities in those countries have caused serious damage to the national security and foreign policy of the United States. Your stated in- 1981 TRAVEL: RIGHT OR PREROGATIVE? grounds, the Secretary moved to revoke Agee's passport, relying on 22 C.F.R. sections 51.70(b)(4) and 51.71(a). Twenty-two C.F.R. section 51.70 (b)(4) provides: "A passport may be refused in any case in which: ... The Secretary determines that the national's activities abroad are causing or are likely to cause serious damage to the national security or the foreign policy of the United States." Twenty-two C.F.R. section 51.71(a) provides: "A passport may be revoked, restricted or limited where: The national would not be entitled to issuance of a new passport under Sec- tion 51.70." Agee rejected his right to administrative review and instead filed a complaint with the district court seeking declaratory and injunctive relief.56 The district court held that the State Department regulation authorizing passport refusal or revocation on national security or foreign policy grounds is valid only if there is either an express or implied authorization from Congress."' In reaching this conclusion the court adopted substantial parts of Kent v. Dulles." Accepting the premise that the right to travel is constitutionally protected,"9 the district court stated that "[tihe Secretary of State's power to revoke or limit a passport flows from Con- gress not from the President. . . .His power is no greater than Congress may choose to delegate to him." 60 Finally, since the challenged action was against a protected individual right, the court stated that any delegation must be narrowly construed. Finding no express authorization, the coutt then looked for a "sufficiently substantial and consistent administrative practice" to warrant an implied approval of the challenged regulation." Since its promulgation in 1968, 22 C.F.R. section 51.70(b)(4) had only been used once to revoke a passport. Accordingly, the court held that there was not a substantial and consistent administrative practice upon which an implied approval could be based.*5 The State Department's main support for establishing a substantial and consistent prior administrative practice came from various statutes, regulations, and advisory opinions dating back to 1861. The court found this argument unpersuasive in that the examples listed by the Secretary of State concerned revocations under exigent circumstances. This, coupled with the need to construe narrowly any purported limitation on the protected right to travel, undermined any congressional support the legis-

tention to continue such activities threatens additional damage of the same kind. Agee v. Vance, 483 F. Supp. at 730 n.2. 56. Id. at 730. 57. Id. at 731. 58. 357 U.S. 116 (1958). 59. Agee v. Vance, 483 F. Supp. at 730. 60. Id. at 730. 61. Id. at 731. 62. Id. DEN. J. INT'L L. & POL'Y VOL. 11:15

lation might have enjoyed." Further support for not finding tacit approval of such revocations was found in the failure of Congress to pass proposed legislation granting the power then in question in 1958." In sum, the Court "conclude[d] that the Secretary's promulgation was without authorization from Congress"56 and thus invalid. On appeal, the court of appeals affirmed the district court." Apply- ing essentially the same tests as the district court, the court of appeals found no express congressional support for the regulation. 7 The court also did not find any substantial and consistent administrative practice to support the current regulation, stating that "[u]ntil Agee's case arose 22 C.F.R. Section 51.70(b)(4) was virtually unused."" The court did state that if Agee were indicted or otherwise charged with criminal conduct, past Supreme Court decisions would support revocation of his passport, thus providing a possible method for restraining Agee." Circuit Judge MacKinnon submitted an exhaustive dissent in which he went to great lengths to uphold the regulation and thus the revocation of Agee's passport.70 Judge MacKinnon found the challenged regulations to be constitutional on their face. 71 He reached this conclusion by first incorporating the President's power in hostage situations under 22 U.S.C. section 1732 7 and the authority of Zemel v. Rusk.7 s The hostage situation

63. Id. 64. Id. at 732 n.. In fact two separate bills were introduced, one in 1958 and the other in 1966, which would have permitted the denial of passports to persons whose activities or presence abroad would "seriously impair the conduct of foreign relations" of the United States or would "be inimical to the security of the U.S." Both bills died in committee and were never brought to a vote on the floor. See S. 4110, 85th Cong., 2d Seas. (1958); H.R. 14895, 89th Cong., 2d Seas. (1966). 65. 483 F. Supp. at 732. 66. Ages v. Muskie, 629 F.2d 80 (D.C. Cir. 1980). 67. Id. at 85-86. The Secretary's argument that the Passport Act, when combined with the President's foreign policy powers, would uphold the regulation was again rejected. The court also noted the two unsuccessful attempts by the Department of State, in 1958 and 1966, to have bills passed in Congress granting this power to the Secretary of State. See note 64 supra. 68. 629 F.2d at 86. 69. Id. at 87 n.10. 70. Id. at 87. At one point Judge MacKinnon goes so far as to include a draft indictment of Agee which could be used to allow revocation on the grounds of a criminal indictment. Id. at 105 n.62. 71. Id. at 109. 72. 22 U.S.C. § 1732 states: Whenever it is made known to the President that any citizen of the United States has been unjustly deprived of his liberty by or under the authority of any foreign government, it shall be the duty of the President forthwith to demand of that government the reasons of such imprisonment; and if it appears to be wrongful and in violation of the rights of American citizenship, the Presi- dent shall forthwith demand the release of such citizen, and if the release so demanded is unreasonably delayed or refused, the President shall use such means, not amounting to acts of war, as he may think necessary and proper to obtain or effectuate the release; and all the facts and proceedings relative 1981 TRAVEL: RIGHT OR PREROGATIVE? in Iran provided the necessary crisis, and on December 17, 1979 a news- paper article reported that Agee had been invited to travel to Iran in or- 7 4 der to participate in a "tribunal" that was to judge the U.S. hostages. If it was in fact true that Agee was going to Iran, then it would appear that section 1732 of the Hostage Law could support the revocation as a measure "necessary and proper. . . to effectuate the release" of the American hostages held in Iran. In sum, both lower court decisions considered the right to travel as a part of the liberty "of which the citizen cannot be deprived without due process of law under the Fifth Amendment.' If such a right is to be regulated it must be pursuant to congressional action. The requisite action must be either an express delegation or a sufficiently substantial administrative practice to warrant implicit congressional approval. Neither was found and thus 22 C.F.R. section 51.70 (b)(4) was declared invalid. The Secretary of State appealed the decision and the Supreme Court decided the case on June 29, 1981.10 . In an opinion written by Chief Justice Burger, the Court, by a seven- to-two vote, reversed the two lower court decisions and found the regulation and the subsequent passport revocation to be valid. A brief summary of the Court's decision reveals the subtle, yet ultimately, substantial changes in the interpretation of past cases that was necessary to reverse the lower courts. The primary difference is the Supreme Court's focus on the national security and foreign policy aspects of the case at the expense 7 of the right to travel. Chief Justice Burger begins by establishing the lack of any express statutory limitation on the Secretary of State's power to revoke a citizen's passport or to deny a passport application. The Passport Act of 1926 states only that the "Secretary of State may grant and issue passports .. . under such rules as the President shall designate. ... ."7 Once this rather open-ended grant of authority is established, Chief Justice Burger

thereto shall as soon as practicable be communicated by the President to Congress. 73. 381 U.S. 1 (1965). 74. N.Y. Post, Dec. 17, 1979, at 2, col. 4. Arguably, 22 U.S.C. section 1732 could apply here since there is a broad grant of power under this statute. In comparing the situation with Zemel, the Iranian crisis was more immediate since U.S. citizens were being held at that time. See Agee v. Muskie, 629 F.2d at 97. It should be noted that Agee submitted a sworn affidavit stating he was neither invited to Iran nor did he ever intend to go to Iran as long as U.S. citizens were still held hostage. The entire link to Iran flowed from the one uncorroborated article in the New York Post. See Brief for Appellee at 4, Haig v. Agee, 101 S. Ct. 2766 (1981). 75. Kent v. Dulles, 357 U.S. at 125. 76. Haig v. Agee, - U.S. -, 101 S.Ct. 2766 (1981). 77. "The question presented is whether the President, acting through the Secretary of State, has authority to revoke a passport on the ground that the holder's activities in foreign countries are causing or are likely to cause serious damage to the national security or foreign policy of the United States." Id. at 2769. 78. 22 U.S.C. § 211a (1976). DEN. J. INT'L L. & POL'Y VOL. 11:15 links this authority to the Executive's control over foreign policy and national security. The opinion also stresses the need for a "consistent administrative construction" of the Passport Act." There is an important statement, hidden in a footnote, which per- vades the entire opinion and, arguably, distinguishes this opinion from the two lower court opinions. After stating that congressional silence is not to be equated with congressional disapproval, footnote twenty-one states that "[tihis case does not involve a criminal prosecution; accordingly, strict construction against the Government is not required."0 (Emphasis added.) This belief is extremely important in the outcome. of the case, since absent an express congressional delegation of authority, there must be a sufficiently substantial and consistent administrative practice to find an implicit congressional authorization. The lower courts, applying Kent, stated that given the nature of the right being affected, it would "construe narrowly all delegated powers that curtail or dilute (the right to travel]."'' The importance of this distinction becomes obvious given the basis upon which the State Department supported its argument: that there was a sufficiently substantial and consistent administrative practice to confer implicit congressional approval. If, as the majority opinion states, strict construction against the Government is not required, then it is much less of a burden on the Secretary of State to show that the required administrative practice existed. This is, in fact, what happened. By not requiring a narrow construction5 ' as dictated by Kent, the Court held that there was a "sufficiently substantial and consistent" administrative policy to conclude that Congress implicitly approved the challenged regulation."8 This failure to require a narrow construction of the purported delegation enabled the Court to find implicit support where it might not otherwise have been found. Absent evidence of an intent to repudiate longstanding administrative construction, the Court "conclude[d] that Congress, in 1926, adopted the longstanding administrative construction of the 1856 statute."" Further implicit support for the regulation was found in congres-

79. 101 S.Ct. at 2774. The Court, citing Zemel v. Rush, 381 U.S. at 17, states that "Con- gress-in giving the Executive authority over matters of foreign affairs--must of necessity paint with a brush broader than that it customarily wields in domestic areas." 80. 101 S.Ct. at 2774 n.21. 81. 357 U.S. at 129, quoted in Agee v. Muskie, 629 F.2d at 83. 82. See also Justice Brennan's dissent in Haig v. Agee, 101 S. Ct. at 2785. 83. Id. at 2781. 84. Id. at 2777. The Court found that the 1856 Passport Act, ch. 127, § 23, 11 Stat. 60 (1856), granted the Secretary of State wide powers, based upon the Executive's control over foreign policy. Then, citing Lorillard v. Pons, 434 U.S. 675 (1977), to the effect that Con- gress is presumed to be aware of administrative or judicial interpretation of a statute when it reenacts a statute without change, the Court implied that the 1926 Passport Act adopted the early broad construction. 1981 TRAVEL: RIGHT OR PREROGATIVE? sional silence in the face of administrative policy." The cases cited by the Court" stand for the proposition that "acquieqcence by Congress in an administrative practice may be an inference from silence during a period of years. ' 87 (Emphasis added.) The Court refused to construe this narrowly and applied their method of implicit approval to an administrative regulation that had only been invoked once in twelve years. Congressional silence can only be meaningful when there is an exercise of executive discretion, as opposed to the mere possession of the discretion." By substi- tuting the administrative policy requirement for the administrative practice requirement, the Court both strays from the holding of Kent and belittles the due process requirement of the Fifth Amendment."s In his dissent Justice Brennan notes and criticizes the majority opinion's alteration of past cases. In response to the argument that silence can be seen as implicit approval of a regulation, he states: Only when Congress had maintained its silence in the face of a consistent and substantial pattern of actual passport denials or revocations-where the parties will presumably object loudly, perhaps through legal action, to the Secretary's exercise of discretion-can this Court be sure that Congress is aware of the Secretary's actions and has implicitly approved that exercise of discretion." The dissent further points out that much of the material the majority opinion uses to support its conclusion was "expressly abjured in Kent v. Duties.""I There are certain situations, as noted by Justice Brennan in his dissent, when bad facts make bad law. Unfortunately, the law that results can reassert itself at inopportune moments and, in this situation, allow the regulation to inhibit travel of those persons who merely seek to criti- cize government policy."2 Philip Agee and his purported activities influenced the majority of the Court to focus upon the national security and foreign policy issues of the case, while silently dismantling the holding in

85. 101 S.Ct. at 2778. 86. Udall.v. Tallman, 380 U.S. 1, 16-18 (1965); Norwegian Nitrogen Co. v. United States, 288 U.S. 294, 313 (1933); Costanzo v. Tillinghast, 287 U.S. 341, 345 (1932). 87. Norwegian Nitrogen Co. v. United States, 288 U.S. at 313. 88. See Justice Brennan's dissent in Haig v. Agee, 101 S.Ct. at 2786. Contrary to both past cases and the underlying purpose in requiring an administrative practice as the indicator of implicit congressional support, the majority opinion stated that "if there were no occasions-or few to call the Secretary's authority into play, the absence of frequent instances of enforcement is wholly irrelevant." Id. at 2779. 89. Chief Justice Burger differentiates between the interstate right to travel and the right to travel internationally-the former being virtually unqualified, while the latter is considered "no more than an aspect of the 'liberty' protected by the Due Process Clause of the Fifti Amendment." Id. at 2782. The point the Court conveniently overlooks is that the regulation of this right to international travel is limited to either express congressional limitations or the administrative practice requirement discussed above. 90. Id. at 2786. 91. Id. 92. Id. at 2788 n.9. DEN. J. INT'L L. & POL'Y VOL. 11:15

Kent.9 While his actions could be perceived as harming the national security, the opinion, a§ written, has a potentially much broader application. It is interesting to note that this particular controversy could have and probably should have been avoided altogether. Kent recognized that passport revocations are authorized when the applicant has engaged in and been indicted for illegal conduct." As noted by Judge MacKinnon in his dissent, it appears that Agee could have been indicted for violating the Willful Communication of Defense Information Statute." ' Agee dis- closed the identity of undercover CIA agents and CIA sources and methods throughout the world. These acts were clear violations of the above statute. But since Agee was not indicted for any crime, the Court was forced to look to other methods to limit his travel. Prior to the Supreme Court's reversal of the two lower courts, it appeared that this oversight would have a substantial effect on the freedom of Philip Agee. It now appears that the Department of State actually increased its ability to act freely through its nonreliance on the criminal indictment.

IV. CONSTITUTIONAL PROTECTION OF THE RIGHT To TRAVEL

In determining what degree of protection and what due process requirements a particular activity merits, it is necessary to consider the importance or advantages of the activity both to the individual and to the State." The fact that travel is important is evidenced by the number of people it affects. As transportation methods improve, the world becomes a relatively smaller place; and as standards of living rise, more people are travelling abroad. Beyond the sheer number of people who travel abroad, the purposes behind those travels are also important." An individual's occupation may require overseas travel. For example, foreign correspon- dents and lecturers are required to travel. Even if not necessary, it may be of great potential value in the successful conduct of an individual's profession. Businessmen and students may benefit greatly from travel abroad. These reasons suggest that free movement may be basic to any

93. See Justice Blackmun's concurrence, id. at 2783-84. 94. 357 U.S. at 127. This point is noted and developed in Judge MacKinnon's dissent in Agee v. Muskie, 629 F.2d at 104-05. 95. 18 U.S.C. § 793(d) (1976). It states: Whoever, lawfully having possession of ... information relating to the national defense which information the possessor has reason to believe could be used to the injury of the United States or to the advantage of any foreign nation, willfully communicates, delivers, transmits or causes to be communicated, delivered, or transmitted or attempts to communicate, deliver, transmit or cause to be communicated, delivered or transmitted the same to any persqn not entitled to receive it, or willfully retains the same and fails to deliver it on demand to the officer or employee of the United States entitled to receive it ... [slhall be fined. .. or imprisoned... or both. 96. See Note, Passport Refusals, supra note 24, at 190. 97. Id. at 191. 1981 TRAVEL: RIGHT OR PREROGATIVE? guarantee of freedom of opportunity."s Reasons for travel abroad also include those closer to the core of personal life, such as marriage and re- uniting families. Finally, the need for a free and fully informed society is basic to. the protection of a citizen's "right to know.' " What transpires abroad has a definite impact on matters of domestic as well as foreign policy.10 Freedom of mobility is essential in a democratic society. One of the first acts of any totalitarian system is to gain control of the information channels and to repress the free movement of the population in order to control and to influence what information and opinions reach its people. The denial of freedom of movement is a warn- ing that other repressions are likely to follow.1 ' Given the importance of travel to our democratic society, it is surprising to find that nowhere in our federal constitution is there an expressed right to travel freely. Consequently, questions arose as to the nature and extent of the ordinary freedom of an American.citizen to leave his country and return as he or she pleases. Controversial passport refusals on the vague basis that the intended travel would not be in the "best interests of the United States" began to receive public attention. In response to this public concern, the courts began to focus on the problem and a judicially constructed right to travel began to emerge.1" In Bauer v. Acheson,'os a district court rejected the State Depart- ment's claim of absolute discretion in the issuance of passports. The plaintiff, an American journalist working in Paris, had her passport revoked without a hearing or notice. The Secretary of State refused to review or validate her passport except to allow her return to the United States, explaining that the plaintiff's activities were not in the best interests of the United States.104 By connecting international travel to the liberty of the due process clause of the Fifth Amendment, the court expressed the novel view that a right to foreign travel existed in the Constitution."' However, the court cautioned that the right to travel abroad was not an absolute right but was subject to reasonable regulation, over which the Secretary of State had "wide", though not absolute, dis-

98. Vestal, Freedom of Movement, 41 IowA L. Rav. 6, 12 (1955). 99. Note, The Right to Travel Abroad, 42 FORDHAM L.Rsv. 838, 840 (1974) [hereinafter cited as Note, Right to Travel Abroad]. While the "right to know" is an important personal right, the Court in Zemel v. Rush would not validate the passport of a U.S. citizen to travel to Cuba when the citizen desired to inform himself of the conditions in Cuba. The foreign policy considerations were sufficient to carry the day as the Court rejected appelant's First Amendment claims and distinguished Kent v. Dules, which dealt with an individual's beliefs. See also notes 124-27 infra and accompanying text. 100. Note, Passport Refusals, supra note 24, at 191. 101. Vestal, supra note 98, at 13. 102. See Note, Right to Travel Abroad, supra note 99, at 839. 103. 106 F. Supp. 445 (D.D.C. 1952). 104. Id. at 448. 105. Id. at 451. DEN. J. INT'L L. & POL'Y VOL. 11:15 cretion.'" Bauer thus applied the standards of procedural due process to the methods by which the federal government could restrict travel. The significance of this case was its "recognition of the . . . conflict between the right of international travel and the privilege of retaining a valid passport.''0o7 The case of Schachtman v. Dulles,'0 whose facts were discussed earlier, considered whether a passport refusal to the national chairman of the Independent Socialist League was arbitrary, thus raising substantive due process issues.10' In the court of appeals opinion, the judge stated that the right to travel was a "natural right" which must be accorded due process protection." 0 The Supreme Court did not review either of the above two cases, since the Secretary of State acquiesced and granted the parties their passports. As mentioned earlier, the Supreme. Court in Kent held that "the right to travel is a.part of the liberty of which the citizen cannot be deprived without due process of law under the Fifth Amendment." '' The question left open and which the Agee case dealt with concerned what process was actually due and to what extent the right to travel could be regulated. Nevertheless, Kent did propound a rule of law sufficient to enable the Court to declare section 6 of the Subversive Activities Control Act of 1950112 to be unconstitutional on its face in Aptheker v. Secretary of State."'3 The Aptheker opinion has been interpreted in two different ways, differing on whether it is a First or Fifth Amendment decision. The first interpretation is that the right to travel, since it is closely linked to the personal rights of the First Amendment, deserves greater protection and a preferred status to that of other property rights protected by the Fifth Amendment. This would extend the Fifth Amendment protection for the right to travel beyond the substantive due process rule of reasonable- 1 ness.' 4 The second interpretation is more widely accepted and views the First Amendment rights to be related to the right to travel in only certain

106. Id. at 451-52. 107. Note, Passports and Freedom of Travel: The Conflict of a Right and a Privilege, 41 GEo. L.J. 63, 85 (1952). 108. 225 F.2d 938 (D.C. Cir. 1955). 109. Id. at 941. 1 110. Id. While the court held that the right to travel was a natural right, it did acknowledge that such right was subject to reasonable regulation under law. Further, in determining what is arbitrary, the court said one must consider the circumstances during which the act occurs. Thus, times of national emergency could expand the boundaries of what is reasonable. 111. 357 U.S. at 125. 112. Subversive Activities Control Act of 1950, ch. 1024, § 6, 64 Stat. 987 (1950). 113. 378 U.S. 500 (1964). The Court found that the provision which made it a crime for a member of a Communist organization to apply for a passport, "swerptl too widely and too indiscriminately across the liberty guaranteed in the Fifth Amendment." Id. at 514. See notes 34-36 supra and accompanying text. , 114. See Right to Travel Abroad, supra note 99, at 842. 1981 TRAVEL: RIGHT OR PREROGATIVE? specific situations, and only in these situations would it therefore be treated as a preferred right."16 If the right to travel in a particular case involved no First Amendment rights, it would receive no extra protection. The question becomes what would happen to travel situations which did not involve any First Amendment personal rights? The concept of a First Amendment guarantee of the right to travel was rejected in 1965 by the Court in Zemel v. Rusk."' In rejecting Zemel's First Amendment claim, the Court distinguished Kent and Aptheker which were concerned with individual denials based on depriva- tion of the rights of expression and association.'1 7 Zemel's right to travel was a due process right and was controlled by the balancing test of the Fifth Amendment." 8 The Court found the restriction on travel to Cuba to be supported by "the weightiest considerations of national security,""' thus shifting the balance in favor of the State Department. Therefore, against this backdrop of judicial opinions, the right to travel has been most frequently found within the Fifth Amendment Due Process Clause. The case of Woodward v. Rogers" reaffirms this implication. In this case, a federal district court held that the denial of a passport to the plaintiffs who refused to swear an oath of allegiance was violative of their constitutional right to travel derived from the Fifth Amendment. There must be a governmental need for instituting loyalty oaths. Where a governmental purpose is supported by an overriding and substantial national interest and does not "unduly ...infringe upon a constitutionally protected freedom," the measure will be upheld."' It was the national interest which was lacking in Woodward. In applying the Fifth Amendment due process requirement, there must be a balance between the individual right and the governmental interest in question. In review, prior to the decision in Haig v.Agee, there appeared to be substantial support for the proposition that the right to travel internationally was a right contained in and protected by the Fifth Amendment. This basic individual right could not be diminished unless done in a fashion consistent with the due process requirements of the Fifth Amend- ment. According to Kent and its progeny, any attempt to limit this right had to be construed narrowly. Yet, as shown above, Haig v. Agee dis- carded this requirement and in fact stated that since no criminal indictment was involved, strict construction against the Government was not

115. Id. at 843. 116. 381 U.S. at 16. 117. See Right to Travel Abroad, supra note 99, at 844. 118. 381 U.S. at 14-16. The Court states that "[tihe requirements of due process are a function not only of the extent of the governmental restriction imposed, but also of the extent of the necessity of the restriction." 119. Id. at 16. 120. 344 F. Supp. 974 (D.D.C. 1972). The court also held that any infringement on the right to travel will be narrowly construed as called for by Kent v. Dulles. Id. at 982. 121. Note, Constitutional Law-Loyalty Oaths Obstructing Civil Liberties, 19 N.Y.L.F. 185, 186 (1973). DEN. J. INT'L L. & POL'v VOL. 11:15

3 2 necessary. 2 While it certainly appeared that a legitimate national interest existed in Agee's case, the decision nevertheless was reached at the expense of the right to travel when the Court found implicit approval for the regulation after considering only administrative policy and not administrative practice. Thus, the protection afforded this right was diminished. The right to free travel is not awarded the same amount of importance in all countries. For example, in the Australian system there is no right to free international travel since there is no absolute right to a passport."' Other countries have adopted similar policies which restrict free travel in varying degrees. Only recently have many countries recognized the advantages of free travel between nations.1 " Some examples of those contributions to free travel follow.

V. MULTILATERAL EFFORTS AT FREE TRAVEL

Extending free travel abroad has been possible through the cooperation of different countries. An early indication of this cooperation was demonstrated in the Universal Declaration of Human Rights which was adopted by the General Assembly of the United Nations on December 10, 1948." I' Article 13 includes the following declaration: "(1) Everyone has the right to freedom of movement and residence within the borders of each State. (2) Everyone has the right to leave any country including his own, and to return to his country." The commitment of the United Na- tions to the goal of extending free travel was an important step towards the universal recognition of a basic right to freedom of movement."*6 Probably the most effective example of multinational efforts at free travel is the European Economic Community (EEC). The treaty establishing this international organization was adopted- in 1957.1"' The treaty's goals are economic rather than political, and consist of eliminating barriers to the free exchange of goods and promoting the free movement of persons, services, and capital. It requires member states to aban- don immigration restrictions on the entry of Community workers and to

122. See note 79 supra and accompanying text. 123. Jaconelly, The Justice Report on Passports,38 MOD. L. Rv. 314, 315 (1975). 124. D. TuRAcK, supra note 1, at 23. 125. Universal Declaration of Human Rights, Dec. 10, 1948, G.A. Res. 217 A (III), U.N. Doc. A/810, at 71 (1948). 126. Global implementation of the United Nations Universal Declaration of Human Rights has had its shortcomings although its influence is apparent in the constitutions of new states. The absence of any compulsory mechanism to guarantee the declaration's effectiveness has been one of its problems, although it has manifested a great political impact on both the international and national levels. See A.H. ROBERTSON, HUMAN RITowrs IN NA- TIONAL AND INTERNATIONAL LAW 290 passim (1968). On the status of the Universal Declara- tion in international law, see Sohm, The Universal Declaration of Human Rights, J. INT'L COMMISSION JURS. 17 (1967). 127. Treaty Establishing the European Economic Community, Mar. 25. 1957, 298 U.N.T.S. 11, entered into force Jan. 1, 1958 [hereinafter cited as Treaty of Rome). 1981 TRAVEL: RIGHT OR PR.EROGATIVE? treat Community workers as nationals with respect to employment opportunities and conditions."' The major advantages of the EEC are the effective allocation of manpower resources in a single common market and the conditions which provide workers with a chance to improve their standard of living.38 However, limitations to the effectiveness of the EEC are that the treaty includes two exceptions to the principle of free movement of labor. First is that free movement is not guaranteed to "public service" employees."" Second is the "public policy exception" which specifies that free movement is made subject to limitations justified on grounds of public policy, public security, or public health. "" The current interpretation of public policy by the European Court of Justice has been to allow each member state discretion in defining and applying it. This interpretation has interfered with the objectives of free movement of workers, and many critics have advocated a more restrictive interpretation.' " Another multilateral effort aimed at free travel occurred in 1962 when the U.N. study on the right to free travel was completed.'8" Under the sponsorship of the Commission of Human Rights, and more specifically its Sub-Commission on Prevention of Discrimination and Protection of Minorities, Dr. Ingl6s was appointed to prepare a study concerning the right of any person to leave and to return to his country. The study sur- veyed the practice of ninety states on the subject and reported that only twenty-four states constitutionally recognized the right of a national to leave his or her country, while twelve states recognized the right to judicial interpretation.'" Dr. Ingl6s offered a draft of specific proposals for national and international action to ensure freedom and nondiscrimina- tion in the enjoyment of the right of international mobility.' The following year, a U.N. Conference on International-Travel and Tourism was held in Rome.13' Among other things, the Conference encouraged states to minimize requirements and simplify procedures when issuing passports."7 On December 21, 1965, the General Assembly ap-

128. Reisner, National Regulation of the Movement of Workers in the European Eco- nomic Community, 13 AM. J. Comp. L. 360 (1964). 129. Singer, Free Movement of Workers in the European Economic Community: The Public Policy Exception, 29 STAw. L. Rav. 1283 (1977). 130. Treaty of Rome, supra note 127, art. 48(4). 131. Id. art. 48(3). 132. Singer, note 129 supra. 133. Ingl6s, Study of Discrimination in Respect of the Right of Everyone to Leave Any Country, Including His Own, and to Return to His Country, U.N. Doc. E/CN.4/Sub.2/229/ Rev.1 (1963). 134. Id. at 4. 135. Turack, Freedom of Movement and the Travel Document, 4 CAL.W. INT'L L. REv. 8, 12 & n.26 (1973). 136. U.N. Conference on International Travel and Tourism. Recommendations on In- ternational Travel and Tourism, U.N. E/CONF. 47/18 (1964). 137. Turack, supra note 135, at 12. DEN. J. INT'L L. & POL'Y VOL. 11:15

proved the text of the International Convention on the Elimination of All Forms of Racial Discrimination which was then opened for signature by the member states.138 Each state which ratifies or adheres to the Conven- tion undertakes to eliminate racial discrimination and to guarantee the right of everyone to equality before the law in the enjoyment of free travel.185 Unlike the Universal Declaration, the International Convention is a treaty and will become legally binding on every country which ratifies it once the treaty enters into force. The machinery provided in the Con- vention will assure greater protection of this human right when implemented. Another effective method of extending freedom of movement is the formation of passport unions. Under this type of agreement, the passport requirement is waived for nationals of states comprising the union, while others must present their passport for initial entry or departure from the union's territory. There are a number of conditions which are necessary for the existence of a passport union which include a common labor market, close proximity of countries, and similar immigration policies. Two of the multistate passport unions existing today are the Scandanavian Pass- port Union consisting of Denmark, Finland, Norway and Sweden, and the Benelux Passport Union consisting of Belgium, The Netherlands, and Luxembourg. 1 0 A final application of efforts to promote free travel which will be mentioned is the Helsinki Accord of 1975'41 and the subsequent Belgrade Conference of 1977. The Helsinki Accord was a conference on security and cooperation in Europe and the Belgrade Conference was a review and assessment of the Helsinki process. The Conference established a number of principles of governmental conduct concerning freedom of transnational movement which attempted to balance the objectives of free mobility of persons and respect for the sovereign state's rights." ' The multilateral efforts at free travel which have been mentioned are quite varied in their effectiveness and the results they have achieved. However, they are all attempts to promote free travel for individuals between countries and they are instrumental in establishing an international recognition of a fundamental right to free travel.

138. Opened for signature Mar. 7, 1966, entered into force Jan. 4, 1969, 660 U.N.T.S. 195, reprinted in 5 I.L.M. 352 (1966). 139. Id. art. 5(d)(ii). See Turack, note 135 supra. 140. Turack, supra note 135, at 20-27 gives a brief discussion of the history behind each passport union. 141.. Conference on Security and Cooperation in Europe, Final Act, Aug.1, 1975, reprinted in 73 DEP'T ST. BULL. 323 (1975); also reprinted in 14 I.L.M. 1292 (1975). See HUMAN RiGHTs, INTRNATIONAL LAW AND THm Has mNrAccoiD (T. Buergenthal ed. 1977). 142. See Turack, Freedom of TrananationalMovement: The Helsinki Accord and Be- yond, 11 VAND. J. TRANSNAT'L L. 585 (1978). 1981 TRAVEL: RIGHT OR PREROGATIVE?

VI. CONCLUSION While travel and mobility have become indispensable in our society, there still exist restrictions on the exercise of that right. Now that the passport has become an essential travel document, the lack of one is a major restraint on international mobility. The State Department may now prevent a person from travelling internationally by not issuing or revoking his passport. As the State Department has exercised this power, the courts have become involved in an effort to clarify and to delineate the powers of the State Department. In the past, courts have upheld passport denials or revocations in cases involving area restrictions and when a person has been indicted for a criminal offense. Now, revocations are possible in situations where the Secretary of State determines that the person's activities "are causing or are likely to cause serious damage to the national security or the foreign policy of the United States .... 148 Since Kent it has been accepted judicially that the right to international travel may be regulated.1"4Kent also established the fact that this right is a part of the liberty protected by the Fifth Amendment and that any regulation of this right must be pursuant to either an express or implicit congressional delegation. The Agee case dealt with implicit authorization and, contrary to the holding in Kent, the Court did not construe narrowly the implied delegation. A sufficiently substantial and consistent administrative policy, not practice, was found in past State Department actions. This was so even though the challenged regulation had only been used once prior to the case. In reaching this conclusion, the Court placed undue emphasis on the foreign policy aspect of the passport question. This increased the State Department's area of discretion at the expense of the individual's right to international travel. There is no express constitutional protection of the right to travel. The basis of this right has traditionally been found in the First and Fifth Amendments. The broadening in the balancing of the interests of the Secretary of State's discretion must. then be seen as an infringement on the above-enumerated amendments. Freedom of speech and the liberty protected by the Fifth Amendment take on new meanings when seen in an international context, as these rights must be balanced against national and foreign policy interests. This balancing is in fact a limitation on the above rights.

143. 22 C.F.R. § 51.70(b)(4) (1981). 144. It is important to reiterate that the Agee case deals with international travel. The Court, citing Califano v. Aznavorian, 439 U.S. 170 (1978), clearly distinguishes interstate travel from international travel. Haig v. Agee, 101 S.Ct. at 2782.

. FREEDOM OF MOVEMENT IN THE CARIBBEAN COMMUNITY

DANIEL C. TURACK"

A. Movement of Persons Among the English-speaking CaribbeanCoun- tries Before 1970 International law provides that all states, as an incident of sovereignty, have the right to restrict the entry of aliens into their territory. Basically, all countries recognize the need to control the entry of foreign- ers and, in the case of British Caribbean territories, such control has operated vis-&-vis citizens of other British Caribbean countries for a long time.' Although many "British subjects"' at one time had preferential admission to the territory of some Commonwealth countries, the practice has been severely curtailed along with the use of this term of status.' It is also true to say that the United Kingdom's open door policy on freedom of movement from all parts of the Commonwealth which existed before passage of the Commonwealth Immigrants Act, 1962' did not find a coun-

*Daniel C. Turack is Professor of Law at Capital University Law Center, Columbus, Ohio. B.A. 1957, University of Toronto; LL.B. 1960, Osgoode Hall; LL.M. 1961, S.J.D. 1969, University of Michigan. 1. See, e.g., P.R. & R. 304, 412 of 1967; 90, 91, 130 of 1968 (Jamaica); STAT. R. & 0. 1967 No. 49 (Grenada) (cancelling a prohibited classes order); Guyana Citizenship Act 1967, No. 14; Guyana Notice 245A of 1967; L.N. 148 of 1967 (Barbados), as cited in 11968 AN- NUAL SURVEY OF COMMONWEALTH LAW 141 n.17 (H. Wade & H. Cryer eds. 1969). With respect to the immigration control of Barbados over U.K. citizens, see the discussion of Roger Seymour v.Chief Immigration Officer in Leacock, Prohibited Immigrants and Illegal En- trants under Barbados and United Kingdom Immigration Laws, 23 leftL & Cou'. L.Q. 160 (1974). 2. With respect to the meaning of the term "British subject" and who it encompasses, see J. FAWcrr, Tna BRITISH COMMONWEALTH IN INTERNATIONAL LAW 182-86 (1963) and Clute, Nationality and Citizenship, in THE INTERNATIONAL LAW STANDARD AND COMMON- WEALTH DEvELoPmENTS 100 (R. Wilson ed. 1966). 3. Indeed, the British Nationality Act, 1948 speaks of the term "British subject" but does not define it. One recent commentator has aptly said: [Firom the point of United Kingdom law, no satisfactory definition is possible without taking account of the combined effect of all Commonwealth legislation in the matter. The terms 'British subject' and 'Commonwealth citizen' are also declared to have the same meaning, but again their meaning is only compre- hensible in the light of internal law provisions governing citizenship of the United Kingdom and Colonies and of independent Commonwealth countries respectively. G. GOODWIN-GILL, INTERNATIONAL LAW AND THE MovEMENT or PERSoNS BETWEEN STATIS 12- 13 (1978). 4. 10 & 11 Eliz. 2, ch. 21 (1962). Prior to the British Parliament's passage of this legislation, citizens of the United Kingdom, Crown colonies and all other British subjects had a common law right to enter the United Kingdom and remain there indefinitely. These na- DEN. J. INT'L L. & POL'Y VOL. 11:37

terpart in the Caribbean. The common law right of entry into the United Kingdom' and Colonies prior to 1962 had been displaced much earlier in the Caribbean territories by legislation involving immigration, the deportation of British subjects and the expulsion of undesirable persons. Any doubt as to whether a citizen of the United Kingdom and Colonies had the right to enter and reside in one of the British dependent territories was resolved in Thornton v.The Police," an appeal from Fiji in 1962 to the' Judicial Committee of the Privy Council. The issue in the case was whether an English journalist was deportable from Fiji under the Fiji Im- migration Ordinance in contravention of the British Nationality Act, 1948. In upholding the colonial legislation and finding it not to be in contravention of the British Act, the Judicial Committee acknowledged with approval the words of Justice Hammett from the colonial court: It is submitted that all citizens of the United Kingdom and colonies have, by virtue of the British Nationality Act, 1948, the free and unfettered right to enter and reside in any place in the United Kingdom and colonies. I have examined the British Nationality Act, 1948, with some care and I can find no provisions in it to this effect. This statute merely governs the status of persons and does not lay down what rights of movement or residence are granted by or attach to that status .... I know of no provision in the British Nationality Act, 1948, which precludes either the United Kingdom or any of the colonies from enacting such legislation they chose (sic] to regulate and control the entry into their territory or residence therein of persons whatever their status may be. ....8 Moreover, a passport legally issued to a citizen of the United Kingdom and Colonies in one Commonwealth territory does not provide any right of entry or sojourn in the territory of another Commonwealth country. The case of Regina v. Secretary of State for Home Department,Ex parte Bhurosah"is illustrative of this point. At issue was whether citizens of the United Kingdom and Colonies from Mauritius, possessing legally issued British passports, could enter the United Kingdom. Despite the water- marks in the passports showing "United Kingdom of Great Britain and Northern. Ireland" and the cautionary note, "This passport remains the property of Her Majesty's Government in the United Kingdom and may

tionality classifications and distinctions are discussed in J. EVANS, IMMIGRATION LAW 21-38 (1976). See also Director of Public Prosecutions v. Bhagwan, [1972] A.C. 60. 5. This right has been traced back to at least early Norman times in Turack, Freedom of Movement: The Right of a United Kingdom Citizen to Leave His Country, 31 OHIo ST. L.J. 247 (1970). 6. See Patchett, English Law in the West Indies: A Conference Report, 12 Ir'L & Comp. L.Q. 922, 954 (1963); British Institute of International and Comparative Law, Law in the West Indies: Some Recent Trends 41 (Special Publ. No. 12, London 1966). With respect to deportation, see the unreported case of Anthony v. Roberts, Antigua Civil Suit No. 71 (1973), discussed in F. PHILLIPS, FREEDOM IN THE CARISBEAN 148 (1977). 7. [19621 A.C. 339. 8. Id. at 342. 9. 11968] 1 Q.B. 266. 1981 MOVEMENT IN THE CARIBBEAN

be withdrawn at any time," the British Court of Appeal held that the bearers did not hold the requisite U.K. passports issued by the Govern- ment of the United Kingdom for admission to the United Kingdom.'0 Beginning in 1949 and continuing through the succeeding years, a more liberal policy on the mobility of persons in the Caribbean was discussed within a proposed federal system involving the British West Indies colonies. Although the envisaged federal system eventually came to frui- tion in the form of the West Indies Federation, by the time of its demise on May 31, 1962, no discernible changes had occurred from the previous restrictive nature of territorial legislation."1 A number of the smaller British Caribbean colonies" became Associ- ated States with the United Kingdom under the West Indies Act 19671" whereby they ceased to be colonies, and the United Kingdom's Parlia- ment and Her Majesty in Council could legislate for them in such matters as external affairs, nationality and citizenship." Although the inhabitants of the six Associated States were entitled to be recognized as citizens of the United Kingdom, Associated States and Colonies," no provision was made for greater freedom of mobility for these citizens into territories of other Associated States or the United Kingdom." However, the territorial

10. Subsequent limits on the right of entry into the United Kingdom of its nationals are discussed in Hepple, Commonwealth Immigrants Act, 1968, 31 MoD. L. RBv. 424 (1968). See also G. GOODWIN-GILL, supra note 3, at 101-22; Williams, British Passports and the Right to Travel, 23 INT'L & CoMP. L.Q. 642 (1974). 11. For a brief discussion of the attempts to reduce restrictions on mobility, see Patch- ett, supra note 6, at 958. The reasons for the failure of the West Indies Federation are examined in Springer, Federationin the Caribbean: An Attempt That 'Failed, in THE Ar- TERMATH O SOVEREIGNTY 189 (D. Lowenthal & L. Comitas eds. 1973) and Wooding, The Failure of the West Indies Federation, 5 Ma~s. U.L. REV. 257 (1966). 12. Those are Grenada, St. Lucia, SL Vincent, Dominica, Antigua and St. Kitts-Nevis- Anguilla. 13. The West Indies Act 1967, ch. 4, reprinted in 4 HALSDURY'S STATUTES OF ENGLAND 610 (3d ed. 1968) [hereinafter cited as 4 HALssURY's STATUTES]. A brief account of the arrangements are outlined in [1966] ANNUAL SURVEY Or CoMMoNWEALTH LAW 8-9 (H. Wade, B. Lillywhite & H. Cryer ede. 1967) and 119671 ANNUAL SURVEY OF COMMONWEALTH LAW 9-11, 709-11 (H. Wade & H. Cryer eds. 1968). A constitutional analysis, excellent background and the ramifications of the formation of the Associated States are found in Gilmore, Legal Perspectives on Associated Statehood in the Eastern Caribbean, 19 VA. J. INT'L L. 489 (1979). See also Broderick, Associated Statehood-A New Form of Decolonisation, 17 INT'L & CoMP. L.Q. 368 (1968). 14. 4 HALSBURY'S STATUTES § 2, at 612. Furthermore, section 5(3) envisaged possible separate citizenship for each state in its constitution, if and when the statehood in association with the United Kingdom was terminated. On February 7, 1974, Grenada was the first of the six Associated States to become independent by the Grenada Termination of Associa- tion Order, 1973 (STAT.INST. 1973 No. 2157). The Grenada Citizenship Act, 1974, No. 37 of 1974, followed and has since been replaced by the Grenada Citizenship Act, 1976, No. 12 of 1976. 15. 4 HALSBURY'S STATUTES section 12(2), at 619, states: "A citizen of the United King- dom and Colonies may, if on the grounds of his connection with an associated state he so desires, be known as a citizen of the United Kingdom, Associated States and Colonies." 16. See note 10 supra. DEN. J. INT'L L. & POL'Y VOL. 11:37 governments of the Associated States, with concurrence of the United Kingdom, were entrusted to "negotiate and conclude either bilateral or multilateral agreements with other countries relating to emigration and emigrant labour schemes.' ' In consonance with the desire to expand Caribbean regional economic integration and functional cooperation, eleven Caribbean states, Associated States and British colonies formed the Caribbean Free Trade Association (CARIFTA) in 1968.1* The CARIFTA Treaty envisages freedom of establishment in article 20. The right to establishment refers to the right of an individual to enter another territory and pursue some economic enterprise" there. Establishment is complementary to freedom of mobility of those going from one CARIFTA member's territory to another 0 and is unique in that its ambit of access is defined in terms of "persons belonging to another Member Territory."

17. See Report of the Antigua Constitutional Conference, CMND. No. 2963, Annex D, at 2(g)(1966); Report of the Windward Islands Constitutional Conference, Canrn. No. 3021, Annex D, at 2(g)(1966); Report of the St. Kitte-Nevis-Anguilla Constitutional Conference, CMND. No. 3031, Annex D, at 2(g)(1966), cited in Gilmore, supra note 13, at 536 n.336. See also H. GEISER, P. ALLEYNE & C. GAmJA, LEoAL PROBLEMS OF CARIBBEAN INTEGRATION 22-26 (1976) (hereinafter cited as H. GEISER]; Broderick, supra note 13, at 375. 18. Agreement Establishing the Caribbean Free Trade Association (CARIFTA), reprinted in 7 I.L.M. 935 (1968) [hereinafter cited as CARIPTA Treaty]. The founding members-Antigua, Barbados, Guyana, Trinidad and Tobago-signed the Agreement in Antigla on April 30, 1968, and it entered into force the next day. Dominica, Grenada, St. Kitts- Nevis-Anguilla, St. Lucia and St. Vincent joined on July 1, 1968. Belize became a member in May 1971. For a brief discussion of the legal relations between CARIFTA and the Carib- bean Community (CARICOM), see H. GEISER, supra note 17, at 52-55. 19. "Economic enterprises" are defined in article 20(6)(b) of the CARIFTA Treaty as "any type of economic enterprises for production of or commerce in goods which are of Area origin, whether conducted by individuals or through agencies, branches or companies or other legal persons." CARIFTA Treaty, supra note 18, at 951. 20. Article 20 reads in relevant part: [11 Each Member Territory recognises that restrictions on the establishment and operation of economic enterprises therein by persons belonging to other Member Territories should not be applied, through accord to such persons of treatment which is less favourable than that accorded in such matters to persons belonging to that Member Territory, in such a way as to frustrate the benefits expected from such removal or absence of duties and quantitative restrictions as is required by this Agreement. (2) Member Territories shall not apply new restrictions in such a way that they conflict with the principle set out in paragraph 1 of this Article.

(5) Nothing in this Article shall prevent the adoption and enforcement by a Member Territory of measures for the control of entry, residence, activity and departure of persons where such measures are justified by reasons of public order, public health or morality, or national security of that Member Territory.

CARIFTA Treaty, supra note 18, at 950. 21. Article 20(6) regards a person as belonging to a member territory if such person: (i) is a citizen of that Territory; (ii) has a connection with that Territory of a kind which entitles him to be regarded as belonging to, or, if it be so expressed, as being a native of, the 1981 MOVEMENT IN THE CARIBBEAN

At about the same time CARIFTA was formed, seven British colonies or former British dependencies that were eastern Caribbean islands established a common market which came into effect on July 15, 1968.", One of the main features of the Eastern Caribbean Common Market Agreement was a "phased removal of obstacles to the freedom of movement of persons within the Common Market."' 8 B. The Emergence of CARICOM With the aim of encouraging greater understanding among the peoples of the Caribbean and in recognition of their common heritage and culture, participants at the Seventh Conference of Heads of Government of Commonwealth Countries, meeting in 1972 at Chaguaramas, Trinidad, determined that they would explore the possible relaxation of travel barriers between their countries. A resolution was adopted authorizing a committee of the ministers responsible for immigration in the region to study the feasibility of greater freedom of movement and to submit rec- 24 ommendations to the member governments. ' The next major development occurred on July 4, 1973, with the sign- ing at Chaguaramas of the Treaty Establishing the Caribbean Commu- nity (CARICOM).25 Basically, the Treaty comprises two distinct parts: The first part covers aspects of functional cooperation and foreign policy coordination to attain efficient operation of certain common services and to promote greater understanding among the Caribbean Commonwealth peoples; the second part is a Common Market Annex outlining aspects of economic integration in the Commonwealth Caribbean."" Article 18 of the

Territory for the purposes of such laws thereof relating to immigration as are for the time being in force; or (iii) is a company or other legal person constituted in the Member Territory in conformity with the law thereof and which that Territory regards as belonging to it, provided that such company or other legal person has been formed for gainful purposes and has its registered office and central administration, and carries on substantial activity, within the Area. CARIFTA Treaty, supra note 18, at 951. 22. The East Caribbean Common Market Agreement was signed on June 11, 1968 by Antigua, Dominica, Grenada, St. Kitts-Nevis-Anguilla, St. Lucia and St. Vincent. Montserrat was a later signatory. 23. Quoted in Simmonds, InternationalEconomic Organisationsin Central and Latin America and the Caribbean:Regionalism and Sub-Regionalism in the Integration Process, 19 INT'L & CoMp. L.Q. 376, 390 n.56 (1970). Although CARIFTA ceased to exist on May 1, 1974, the Eastern Caribbean Common Market continued to function after CARICOM became operative. See H. GEISER, supra note 17, at 190. The Treaty entered into force on August 1, 1973. 24. See Caribbean Community Secretariat, The Caribbean Community: A Guide 58 (1973). 25. Treaty Establishing the Caribbean Community, July 4, 1973, -U.N.T.S.-, Doc. No. 13489, reprinted in 12 I.L.M. 1033 (1973) (hereinafter cited as CARICOM Treaty); also reprinted in H. GEISER, supra note 17, at 190.'The Treaty entered into force on August 1, 1973. 26. For an analysis of the Treaty and projections on its likely success, see H. GEIsEs, .42 DEN. J. INT'L L. & POL'Y VOL. 11:37

Treaty calls for member states to cooperate in certain specified areas listed in the Schedule to the Treaty which include "[t]ravel within the region. '27 However, the Caribbean Common Market Annex to the Treaty states quite categorically that a member state is under no obligation to permit unrestricted entry of nationals or residents of other member states into its territory."8 At the same time, though, in addition to further language virtually identical to article 20 of the CARIFTA Treaty,"9 article 36 provides that member states are to extend "preferential treatment" to persons belonging to other member states over persons belonging to states outside the Common Market, where the "provision of services" is concerned."0 This approach of a qualified freedom of movement stems from the fact that all the nations of CARICOM are relatively underdevel- oped and overpopulated, with unemployment problems and diminished opportunities for emigration." Perhaps the most cogent reason for the exclusion of open immigration in the Annex is the magnetic attraction of workers from the less developed countries seeking better employment opportunities into the more developed countries 2 which are not themselves free of unemployment

note 17 supra; O'Connell, The Caribbean Community: Economic Integration in the Com- monwealth Caribbean, 11 J. INT'L L. & ECON. 35 (1976). The changeover from CARIFTA to CARICOM is also briefly outlined in Simmonds, The Caribbean Economic Community: A New Venture in Regional Integration, 23 INT'L & COMP. L.Q. 453 (1974). 27. See CARICOM Treaty, supra note 25, at 1078. 28. Article 38 of the Annex provides: "Nothing in this Treaty shall be construed as requiring, or imposing any obligation on, a Member State to grant freedom of movement to persons into its territory whether or not such persons are nationals of other Member States of the Common Market." CARICOM Treaty, supra note 25, at 1063. The policy set forth in this article contrasts sharply with European Common Market policy which encourages immigration to the other member states. On the free movement of labor, establishment and the right to provide services in the European Economic Commu- nity, see D. TURACK, THE PASSPORT IN INTERNATIONAL LAW 103-13 (1972). See generally T. HARTLEY, EEC IMMIGRATION LAW (1978). 29. See notes 19-21 supra. 30. Article 36(2) notes that "services" shall be considered to mean: "services for remu- neration provided that they are not governed by provisions relating to trade, the right of establishment or movement of capital and includes, in particular, activities of an industrial or commercial character, artisan activities and activities of the professions, excluding activities of employed persons." CARICOM Treaty, supra note 25, at 1063. 31. See Economic and Political Future of the Caribbean: Hearings Before the Sub- comm. on Inter-American Affairs of the House Comm. on Foreign Affairs, 96th Cong., let Sess. 10 (1979) (statement of John A. Bushnell, Deputy Assistant Secretary of State, Bureau of Inter-American Affairs). See also Special Central American Economic Assistance: Hear- ing and Markup Before the House Comm. on Foreign Affairs, 96th Cong., 1st Sesa. on H.R. 5954, H.R. Con. Res. 219 & 221, at 40 (1980). 32. Commentators considering CARICOM tend to divide its membership into either the more developed countries (Barbados, Guyana, Jamaica, Trinidad and Tobago) or the less developed countries (Antigua, Belize, Dominica, Grenada, Montserrat, St. Lucia, St. Vincent and St. Kitts-Nevis-Anguilla). See, e.g., Ailine, Integration and Development in the Commonwealth Caribbean: The Politics of Regional Negotiations, 32 INT'L ORGANIZA- TION 953 (1978). 1981 MOVEMENT IN THE CARIBBEAN difficulties." On the other hand, there is nothing prohibitive in the Treaty or Annex against two or more member countries concluding an arrangement for the free flow of labor specifically or for any other purpose. An arrangement of this nature has in fact emerged and will be discussed below.

C. Constitutional and Legislative Provisions

Both constitutional and legislative provisions pertaining to freedom of movement do not vary greatly among the member countries of CAR- ICOM. In the Constitution of Guyana, for example, the protection of fundamental rights and freedoms includes freedom of movement in explicit terms." However, constitutional preservation of the right of freedom of movement is defined narrowly. In 1968, the Court of Appeals of West Indies Associated States in Margetson v. Attorney General s decided that Antiguan constitutional provisions, ss comparable to those of Guyana, did not confer a right on a Commonwealth citizen from the neighboring island of Montserrat to land and take up residence in Antigua. Legislation controlling movement of persons in the English-speaking Caribbean countries is usually found in statutes covering immigration, deportation and the expulsion of undesirable persons. The executive exer- cises wide powers and it appears that the individual who does not belong to the particular territory has few safeguards. The Guyanese practice, which began before 1970 and is currently operative, illustrates the application of these laws. Under the Immigration Act," all persons not belong-

33. The indigenous work force of each CARICOM member is regarded as a national asset needed to develop the particular member's resources; hence the absence of a common labor market as is found in the European Economic Community. Were it otherwise, a significant migration of labor from the less developed members to those more developed would likely occur. O'Connell, supra note 26, at 62-53. 34. Article 14(1) states: "No person shall be deprived of his freedom of movement, that is to say, the right to move freely throughout Guyana ... the right to enter Guyana, the right to leave Guyana and immunity from expulsion from Guyana." Guyana Independence Order 1966 (STAT. INST. 1966 No. 575), reprinted in 5 CoNsTrrnulONS OP THE COUNTRIES OF THe WORLD (A. Blaustein & G. Flanz eds. 1975) [hereinafter cited as 5 ComsTrruToNs. Exceptions to the prohibition of section 1 are permitted by subsequent sections provided they are made under the authority of law. While Guyana became an independent state in 1966, the Constitution of the territories of St. Christopher, Nevis and Anguilla (which are not yet independent) illustrates constitutional protection of freedom of movement similar to that of Guyana. See St. Christopher, Nevis and Anguilla Constitution Order 1967 (STAT. INST. 1967 No. 228), reprintedin 3 CON- srrtrtloNs or DEPENDENCIES AND SPECIAL SovsniGNrS (A. Blaustein & E. Blaustein eds. 1975) (hereinafter cited as 3 CoNSTrrrU'oss]. In December 1980, Anguilla separated from the Associated State now known as St. Kitt-Nevis to become a British dependency with a British governor. 35. [19681 12 West Indian Reports (W.I.R.) 469. 36. See Antigua Constitution Order 1967 (STAT. INST. 1967 No. 225), reprinted in 3 CoNmsriruoNs, note 34 supro. 37. LAws OP GUYANA, Immigration Act (1973), ch. 14:02 (hereinafter cited as Immigra- tion Act]. DEN. J. INT'L L. & POL'Y VOL. 11:37 ing to Guyana are subject to immigration control. A person is deemed to belong to Guyana if he is a citizen of Guyana or a dependent of any such citizen.su Guyanese citizenship is outlined in considerable detail in the Constitution of Guyana.'9 Certain categories of persons are considered prohibited immigrants and may be denied entry into Guyana unless executive dispensation is authorized. Such persons include, for example, the "mentally deficient," epileptics, sufferers of communicable diseases such as leprosy, prostitutes, convicts, or virtually anyone specified as "undesirable" in an order of the Minister." According to the Immigration Act, any person who enters Guyana at any time from a place outside Guyana is an immigrant 1 and must possess a valid national passport, certificate of identity, travel permit or other document establishing the identity and national status of the bearer. The executive may require a Guyana consular visa and may impose conditions, restrictions, limitations or exceptions regarding entry into Guyana." Furthermore, the executive may also impose restrictions on the right to leave Guyana on any person or class of persons if it is necessary to do so in the interests of defense, public safety, public order, public morality, public health or for the purpose of preventing the subversion of democratic institutions in Guyana. 8 A person can also request entry into Guyana for temporary purposes, for a period not exceeding three months, and may be admitted into the country if (1) he is a passenger in transit; (2) a visitor; or (3) there for medical treatment, employment, trade or business or other purpose of a temporary nature." The President of Guyana also has the absolute discretion to prohibit the entry of any alien into the country."5 Special exemption from the passport requirement exists for citizens of Canada and the United States who possess a return travel ticket, do not intend to remain in Guyana beyond three months from the date of entry, and can satisfy the Guyanese immigration officer of their citizenship." Legislative provision is made for the removal of undesirable nonci- tizens from Guyana in the Expulsion of Undesirables Act.' An "undesirable person," who is defined as "any person other than a citizen of

38. Id. § 2(3). 39. §§ 21-29, Guyana Independence Order 1966 (STAT.INST. 1966 No. 575), reprinted in 5 CONSTrUTIoNs, note 34 supra. 40. Immigration Act, §§ 3(1)-(3). 41. Id. § 2. 42. Id. § 5. 43. Id. § 6(1). 44. Id. § 12(1). 45. Id. § 38. The Minister of Immigration has the same absolute discretion to prohibit the entry of an alien under the Alien (Immigration and Registration) Act (1973), LAWS OP GUYANA, ch. 14:03, section 4(1). 46. LAws oF GUYANA, Immigration (Passports) Order (1977), ch. 14:02, Subsidiary Legislation. 47. LAWS OF GUYANA, Expulsion of Undesirables Act (1973), ch. 14:05. 1981 MOVEMENT IN THE CARIBBEAN

Guyana, in respect of whom the President deems it conducive to the public good to make an expulsion order," can be prohibited from entering the country, caused to leave the country or apprehended and deported. 6 When an individual has an expulsion order made out against him, that person may make representations in writing to the President setting forth reasons for noncompliance with or nonenforcement of the order. On re- ceipt of these representations, the President is obliged to inquire into them and render a decision with all due dispatch."° The President may at any time revoke an expulsion order absolutely or suspend its operation subject to such conditions as he may think fit.60 D. The Emergence of the Caribbean Common Travel Document

As noted above, neither the CARICOM Treaty nor its Annex precludes a member state from concluding agreements involving the mobility of its national labor force to the territory of a receptive host. Such an arrangement emerged during June 1972 when the Premiers of Grenada, St. Lucia and St. Vincent met at Petit, St. Vincent and concluded an oral agreement for the purpose of promoting greater harmony among their peoples. The substantive provisions of the Petit St. Vincent Initiative Agreements1 which entered into force on August 1, 1972 provide that: (1) In order to eliminate barriers to better communication and association among the States: and without prejudice to, or frustration of the constitutional aspiration [sic] of any such State, there shall be effective August 1, 1972, complete freedom of movement among the States of persons belonging to; or being permanent residents of; or accepted visitors of any of these States. (2) Persons belonging to any of these States shall not be subject to any restrictions in their right to work in any of these States. (3) Persons belonging to any of these States shall not be subject to any restrictions in their right to hold land in any of these States. 82

Implementation of the Petit St. Vincent Initiative Agreement soon followed in the legislatures of the participating territories. In Grenada, for example, the Immigration Restriction (Amendment) Act, 1972 was passed to remove prohibited alien status from persons belonging to St. Lucia and St. Vincent (as defined in their respective constitutions), persons who by any law in force in either territory were permanent residents of the territory, and bona fide visitors to St. Lucia or St. Vincent who left the re-

48. Id. §§ 2-4. 49. Id. § 5. For application of the procedure under the Expulsion of Undesirables Act and its relationship to article 14 of the Constitution of Guyana, see Brandt v. A.-G. of Guyana & C.A. Austin, [1971) 17 W.I.R. 448. 50. Expulsion of Undesirables Act, § 12(2). 51. The Agreement had not been published as of May 1981. 52. Letter from Ms. Monica Joseph, Attorney General of St. Vincent, to the author (June 8, 1973). DEN. J. INT'L L. & POL'Y VOL. 11:37 spective territory to visit Grenada.8s During November 1973, the ministers responsible for immigration of the members of CARICOM met in Barbados and agreed that nationals of member states should be permitted to travel within the region on a common travel document. During the inaugural meeting of the Conference of Heads of Government of CARICOM held at St. Castries, St. Lucia on July 15, 1974, the concept of a common travel document was approved and it was agreed that a common immigration card" for use by CAR- ICOM nationals travelling within the region be adopted. The governments of Barbados and Guyana gave further impetus to the reduction of travel restrictions by announcing that they would recognize and accept Identification/Registration Cards issued by any CARICOM member to its nationals as a valid travel document."' At the time of this writing not all of the members of CARICOM have inaugurated the system for freer movement of Commonwealth Caribbean nationals. In addition, no agreement has apparently been reached as to a uniform format for either the common travel document or an Interna- tional Embarkation/Disembarkation (E/D) Card. Nevertheless, significant progress has been achieved.

Barbados

On August 21, 1975 the Minister of Legal Affairs for Barbados, in the exercise of his powers, amended the immigration regulations" to provide for the Barbados International E/D Card. At the same time, provision was made for the issuance of an Inter-Caribbean Travel Document.57 Five days later, the Minister issued an order revoking the need for a visa by any citizen of a CARICOM member or person who has connection with such State of a kind which entitles him to be regarded as belonging to, or, if it be so expressed, as being a native or resident of that State ... and who is in possession of a valid Inter- Caribbean Travel Document issued by the Government of any such Member State.'

53. Immigration Restriction (Amendment) Act, 1972, § 3. In St. Vincent, the Agree- ment was implemented by the Aliens (Land-Holding Regulation) (Commonwealth Carib- bean Territories) Order, 1972 (STAT. R. & 0. 1972 No. 22); in St. Lucia, by the Immigration (Grenada and St. Lucia) Non-Prohibited Class Regulations, 1972 (STAT. R. & 0. 1972 No. 23). 54. The prototype was based on the International Immigration Embarkation/Disembar- kation (ED) Card used by Trinidad and Tobago. 55. See Orrego-Vicuita & Tolosa, Latin American Economic Integration, 6 LAW. Am. 802, 825 (1974). 56. The Immigration (Amendment) Regulations, 1975 (STAT. INST. 1975 No. 249) (Bar- bados). For a short comment on Barbadian immigration policy before this time, see Leacock, note 1 supra. 57. The Passports and Travel Documents (Fees) Order, 1975 (STAT. INST. 1975 No. 243) (Barbados). 58. The Immigration (Visa Requirements and Passports) (Amendment) Order, 1975 1981 MOVEMENT IN THE CARIBBEAN

St. Vincent Although the Inter-Caribbean Travel Document and International El D Card were adopted by St. Vincent on July 7, 1975, no regulations covering the issuance and recognition of the Document and Card were issued at this time. Belize By virtue of the Immigration (Amendment) Regulations, 1976,11 made by the Minister of Home Affairs and Health on February 9, 1976, provision was made for adoption and recognition of the Inter-Caribbean Travel Document. Dominica

An International E/D Card has been issued in Dominica and recognized since March 3, 1970 by virtue of the Immigration (Restriction) (Amendment) Regulations, 1970.0 The Inter-Commonwealth Caribbean Travel Document, as it is called in Dominica, is issued under the authority of the Ministry of Home Affairs by the Police Division. Although there are no regulations governing the issuance or recognition of the Doc- ument, it is in fact issued and recognized by immigration officials in Dominica. s Montserrat

The Inter-Commonwealth Caribbean Travel Document is now issued and recognized by the government of Montserrat. Use of the Document was introduced "administratively rather than legally."ss St. Kitts-Nevis-Anguilla Ingress into and egress from St. Christopher, Nevis and Anguilla is governed by the Immigration and Passport Act of 1947.68 In recognition of these islands' participation in the Caribbean Community, the Govern- ment enacted a regulation" during 1976 which provided for lower fees for

(STAT. INST. 1975 No. 195) (Barbados). 59. STAT. INST. 1976 No. 14 (Belize). 60. STAT. R. & 0. 1970 No. 7 (Dominica). 61. This may be inferred from the express designation on the front cover of the Docu- ment: "To be produced on demand to any Immigration Officer or Member of the Police Force." 62. Letters from Mr. George Cabey, Permanent Secretary for Manpower and Adminis- tration, Montserrat, to the author (Feb. 5, 1976). 63. Revised Laws of St. Christopher, Nevis and Anguilla, ch. 45, supplemented by Im- migration and Passport Regulations, 1947 (STAT. R. & 0. 1947 No. 14) issued under section 33 of the Act. 64. Immigration and Passport (Amendment) Regulations, 1976 (STAT. R. & 0. 1976 No. DEN. J. INT'L L. & POL'Y VOL. 11:37 the issuance of work permits to citizens of CARICOM countries. Work permits for non-CARICOM citizens cost substantially more. Furthermore, the International E/D Card is issued and recognized by the Government. Although Anguilla issues a "Caribbean Travel Permit" as well, it is usually only used for emergency purposes, and Anguillans normally travel with a passport issued by the passport officer, valid for travel throughout the Caribbean. E. Official Travel Document of CARICOM The Caribbean Community Secretariat, located in Georgetown, Guyana, is the principal administrative organ of CARICOM. When it becomes necessary for international officers of CARICOM to travel, they do so with the aid of a CARICOM travel document. Although draft regulations concerning the document have been prepared by the Secretariat, they have not been the subject of any official consideration or approval. Indeed, the necessary Protocol on the Privileges and Immunities of CAR- ICOM has not as yet been agreed upon by the member states. Conse- quently, arrangements governing the use of the travel document are not finalized. Despite the absence of any formal agreement and regulations," de facto arrangements are in operation. A CARICOM travel document is issued by the Secretary-General of CARICOM and is valid for an officer's term of duty. It must be returned at the conclusion of such term, the date of which is entered on the document. It may be renewed by the Secre- tary-General without the addition of any stamp from the local (Guyanese) immigration authorities. The bearer must return the document to the Secretariat's safekeeping at the conclusion of each trip on which it is used. Regional immigration authorities in practice accept the document as indication of the officer's official status in the Secretariat and always allow the bearer privileges equivalent to those held by persons in the diplomatic service, in the areas of immigration clearance, customs and departure tax exemptions." F. Conclusions Freedom of movement among the British Caribbean territories did not exist during the late colonial period nor does it fully exist now. Whatever common law right of entry may have existed in the past has been displaced by constitutional provisions and legislative enactments which accord highly discretionary authority to each government's officials

65. The absence of any formal agreement has not prevented officials of other regional international organizations from being issued with similar travel documents for use in official travel, such as the "Official Travel Document of the Organization of American States." See D. TURACK, supra note 28, at 182. 66. Letter from Professor Keith Patchett of the CARICOM Secretariat to the author (June 23, 1978). The status of the CARICOM Travel Document had not changed as of May 1981. 1981 MOVEMENT IN THE CARIBBEAN 49 to restrict the movement of persons into and out of their respective countries. Although high unemployment and disparities in economic development among the member states of CARICOM may well account for the general reluctance to allow unrestricted freedom of movement as between them, the Petit St. Vincent Initiative Agreement marks an explicit attempt to unqualifiedly eliminate all barriers to Caribbean Commonwealth travel. However, while intergovernmental cooperation concerning the free mobility of persons is prevalent and travel among CARICOM member states is encouraged, special immigration treatment has not been forthcoming on a wide scale. The freedom of establishment provisions of the CARICOM Treaty are purposely weak and allow the prospective host country the necessary latitude to curtail any significant influx of nationals from other CARICOM members. Thus, further relaxation of restrictions on migration must await future developments.

Membership Criteria for the ICAO Council: A Proposal for Reform CHRISTOPHER T. TOURTELLOT*

I. INTRODUCTION

The International Civil Aviation Organization (ICAO) was established by the Chicago Convention of 1944.' Due partly to the inability of the participants in the Chicago Conference to reach a consensus on economic matters,' and partly to the absence of a number of important states,' the Conference produced an agreement involving technical and navigational issues rather than economic policy. 4 The ICAO is, however,*

01981 by Christopher T. Tourtellot *Attorney-Advisor, U.S. Civil Aeronautics Board; B.A. Yale University, 1974; M. Litt., University of Aberdeen (U.K.), 1976; M.S.J., Columbia University, 1977; J.D., American University Law School, 1980; Member, District of Columbia Bar. The opinions expressed are those of the author and do not necessarily represent the views of the CAB. 1. Convention on International Civil Aviation, opened for signature Dec. 7, 1944, 61 Stat. 1180, pt. 2,'T.I.A.S. No. 1591, 15 U.N.T.S. 295, reprinted in STAFF OF HOUSE COMM. ON SCIENCE AND ASTRONAUTICS, 87TH CONG., lST SEAss., AIR LAWS AND TREATIES OF THE WORLD 1372 (Comm. Print 1961) [hereinafter cited as Chicago Conventioni. "An organization to be named the International Civil Aviation Organization is formed by the Convention. It is made up of an Assembly, a Council, and such other bodies as may be necessary." Id. art. 43. 2. See T. BUERGENTHAL, LAW-MAKING IN THE INTERNATIONAL CIVIL AVIATION ORGANIZA- TION 4-5 (1969); A. THOMAS, ECONOMIC REGULATION OF SCHEDULED AIR TRANSPORT 198 (1951). The Chicago Convention did relatively little in the economic sphere. Its most signifi. cant contribution is article 5, which authorizes civil aircraft that are not engaged in scheduled traffic to transit and make stops in foreign states. Chicago Convention, supra note 1, art. 5. The analogue to these two rights in the scheduled context is contained in a separate agreement produced by the Chicago Conference. International Air Services Transit Agree. ment, opened for signature Dec. 7, 1944, 59 Stat. 1693, E.A.S. No. 487, art. I, § 1. This agreement limited stops to nontraffic purposes such as refueling and maintenance. Although it is now unusual for even long-range flights to make nontraffic stops, given the extended range of contemporary aircraft, this concession was significant in 1944. The two rights of transit and of nontraffic landing are known as the first two of the "Five Freedoms" of the air. See Lissitzyn, Freedom of the Air: Scheduled and Non-Scheduled Air Services, in THE FREEDOM OF THE AIR 89, 90 (E. McWhinney & M. Bradley eds. 1968) [hereinafter cited as FREEDOM]. The other three freedoms-carriage to and from a foreign state, and between one foreign state and another beyond it-were also cast in treaty form. International Air Trans- port Agreement, Dec. 7, 1944, 59 Stat. 1701, E.A.S. No. 488, reprinted in U.S. DEPT OF STATE, PROCEEDINGS OF THE INTERNATIONAL CIVIL AVIATION CONFERENCE 179 (hereinafter cited as PROCEEDINGS]. Only eleven states still subscribe to that treaty, from which the United States withdrew in 1946. FREEDOM, supra, at 90. As the Conference did succeed in producing these agreements, blame for failure to take economic problems in hand must be laid upon individual states rather than the conferees. 3. See PROCEEDINGS, supra note 2, at 29-41 (list of delegates). Absentees included the Axis states and the Soviet Union. 4. Articles 17-21 concern registration and nationality of aircraft; articles 22-28 deal with DEN. J. INT'L L. & POL'Y Vou. 11:51

the primary international organization dealing with aviation, and in the unlikely event that a multilateral system of economic regulation should replace the present morass of bilateral agreements, the parties would almost certainly extend the ICAO's authority to include this area.' The ICAO Council is the most powerful body of the organization, closely resembling the United Nations Security Council in this respect.4 Its power has become particularly significant in recent years, as the ICAO Assembly (the universal body corresponding to the United Nations Gen- eral Assembly) has met less and less regularly. The Assembly now meets routinely only once every three years, when its primary task is to elect a new Council.' The continuously operating Council has assumed the burden of both routine and extraordinary functions on behalf of the ICAO .and, in this respect, it stands somewhat above corresponding bodies in other international organizations."

measures to facilitate navigation; articles 29-36 set out aircraft requirements; and articles 37-42 are devoted to dictating international standards. Chicago Convention, note 1 supra. 5. Multilateral control of economic issues isunlikely at best. [S]o far States have preferred a system of bilateral agreements to which are annexed lists of specific routes and supplemented, in some regions, by pooling arrangements between airlines. Air transport grows so rapidly that perhaps it would have been impossible, even with the utmost goodwill on the part of all governments, to devise a multilateral system flexible enough to cope with that growth. Binaghi, The Role of ICAO, in FREEDOM, supra note 2, at 17, 21. The bleak outlook has been discussed by several commentators. See, e.g., Desk, The Balance-Sheet of Bilateralism, in id. at 159; McWhinney, InternationalLaw and the Freedom of the Air-the Chicago Con- vention and the Future, 1 RUT.-CAM. L.J. 229 (1969). 6. The Convention sets out the basic characteristics of the Council in articles 50-55. Chicago Convention, note 1 supra. The term "Council" was suggested instead of the original "Board" when its size was expanded to 21 and it was placed in charge of the Air Transport Committee and the Air Navigation Committee. PaocuziNos, supra note 2, at 470. 7. In 1962, the fourteenth session of the Assembly elected the sixth ICAO Council. During the Rome Session the Assembly discussed the desirability of normaliz- ing the situation which has existed for almost a decade, namely that triennial Assembly sessions take the place of annual sessions. Of a dozen delegations which spoke on the matter only one, that of Yugoslavia, proved [sic] against the proposal to meet regularly every third year only. Yugoslavia preferred bi- ennial meetings. Intervening ordinary sessions may still be convened whenever necessary by decision of the Assembly or the Council. 17 ICAO BULL. 193 (Oct. 1962). The Assembly met in two extraordinary sessions in 1971, when the eighteenth Assembly elected the tenth Council. The nineteenth Assembly met in the winter of 1973 to deal with various emergencies, including the election of three new Council members to reflect the increase in the Council's size from 27 to 30. The Netherlands and Pakistan were the -only candidates for election in categories I and II, respectively. ICAO Assembly, 19th Sess., Doc. 9061 (A19-Res., Minutes), at 24-26 (1973) [hereinafter cited as 19th Minutes]. In category III, Trinidad and Tobago were elected over the Philippines. Id. at 27-29. The twentieth Assembly met to discuss revisions to the Chicago Convention in conjunction with efforts to curb aerial terrorism. See ICAO Assembly, 20th Sess., Doc. 9087 (A20-Res., Minutes) (1973). 8. See Chicago Convention, supra note 1, arts. 54 & 55 (duties and powers of Council). See also notes 96-125 infra and accompanying text (comparison of ICAO to IAEA, WHO, 1981 ICAO COUNCIL: REFORM

The ICAO itself is an important international body simply on account of its subject matter. All international organizations, such as the ILO, the IAEA, and the FAQ,9 play important roles at the international level in the fields of labor, atomic energy, and agriculture, respectively. But aviation is more than one of many activities with international aspects. It is also a medium of diplomacy and international relations, as well as a vehicle of national prestige and sophistication. The scope of a state's airline operations indicates its technological status, its capital investment in airplanes, and its links to other nations by virtue of its bilateral agreements that establish its international routes.'0 For these reasons, states are particularly- anxious to follow and to participate in the activities of ICAO and its Council."' Given the above, membership in the ICAO Council is a prestigious position for most nations. Yet despite the radical changes in the size and composition of the international community that have occurred since the Chicago Convention of 1944, the criteria for membership in the ICAO Council have remained unchanged. These criteria, in order of importance and election, are: importance in aviation, importance in air navigation, and representation of geographical regions not adequately included in the first two categories.1 ' The relative change in the importance of this last classification alone exemplifies the need for change in the criteria for election. In 1944, Africa-the continent least likely to be represented in categories I and Il-contained a total of four sovereign states to justify its inclusion in category 111.18 Africa now includes a third of the world's nations and is one of the fastest growing regions in population. Africa's changed status alone is enough to justify a revision of Council membership criteria. The same factors that require a change in this area also require that the changes not only meet today's needs, but also allow for the continua- tion of the emerging trends in international aviation: a trend toward mul- and U.N. Security Council). 9. See notes 96-125 infra and accompanying text. 10. See note 2 supra. Commentary on bilateral agreements is widespread. See, e.g., Az- zie, Specific Problems Solved by the Negotiation of Bilateral Air Agreements, 13 McGILL L.J. 303 (1967); Gertler, Bilateral Air Transport Agreements: Non-Bermuda Reflections, 42 J. AIR L. & CoM. 779 (1976); Stoffel, American Bilateral Air Transport Agreements on the Threshold of the Jet Transport Age, 26 J. AIR L. & CoM. 119 (1959). 11. So far 56 states have held Council seats at one time or another. See Appendix (table of states elected to various Councils). 12. Chicago Convention, supra note 1, art. 50(b). This section also states that the Council shall be composed of 21 states, thus requiring formal amendment procedures whenever the Council's size has been increased. Id. art. 50(a). See notes 126-132 infra and accompanying text for a discussion of ICAO's expansion of the Council. This requirement has led to certain constitutional problems when states that have not yet ratified an amendment increasing the Council's size wish to vote. See T. BUERGKENHAL, supra note 2, at 210-12. 13. Ethiopia, Liberia, Egypt, and South Africa were the only independent African states at the end of World War II. South Africa has since been excluded from ICAO. See 29 ICAO BuLL. 22 (May 1974). DEN. J. INT'L L. & POL'Y VOL. 11:51 tilateral rather than bilaterial economic agreements, use of longer range aircraft, and sophistication of air navigation facilities. The predominant factor, however, has been the replacement of the Cold War bifurcation of the world into East and West with a new division between North and South. The ICAO was originally the product of the "First World," the industrial nations of Western Europe and North America. Eastern Eu- rope and China were not yet communist, and Russia did not participate in the Chicago Conference. At that time, the burning question was the eventual admission of the defeated Axis states." Japan, Italy, East Ger- many and West Germany eventually became members, as did the Soviet Union and the Peoples Republic of China.6 More significantly, seats in the first and second categories were tacitly conceded to these states in accordance with their aeronautical stature.10 The criteria created by the

14. Article 93 deals with the admission of enemy states: States other than those provided for [elsewhere] . .. may, subject to approval by any general international organization set up by the nations of the world to preserve peace, be admitted to participation in this Convention by means of a four-fifths vote of the Assembly and on such conditions as the As- sembly may prescribe: provided that in each case the assent of any State invaded or attacked during the present war by the State seeking admission shall be necessary. Chicago Convention, supra note 1, art. 93. The earliest version of this article would have required admission by unanimous vote. PRO- CEEDINGS, supra note 2, at 645. A subsequent revision placed the figure at two-thirds. Id. at 646. This version followed a Canadian objection to the requirement of unanimity. Id. at 655. China and Denmark (which had been directly invaded and occupied by Axis powers) favored the strict requirement. Greece, with the support of France and Poland, suggested the 80% figure, and also proposed the requirement of assent by any invaded state. This motion was carried. Id. Austria, Italy, and Finland were admitted in 1948 after the U.N. General Assembly approved their applications. ICAO MONTHLY BULL., Aug. 1948, at 3; See also T. Bu- ERGENTHAL, supra note 2, at 19 n.29. Japan was not admitted until 1953. 8 ICAO BULL., Aug.-Oct. 1953, at 11. See also T. BUERGENTHAL, supra note 2, at 21 n.35. West.Germany was admitted in 1955. Id. at 20. 15. Scbenkman claims that shortly before the Kuomintang government denounced the Convention in 1950, the Communist regime demanded that the Kuomintang representatives be driven out. J. SCHENKMAN, THE INTERNATIONAL CIvIL AVIATION ORGANIZATION 131 (1955). Buergenthal disputes this information. T. BUERGENTHAL, supra note 2, at 37. The Peoples Republic of China did not take part in the Assembly until 1974, ICAO Assembly, 21st Sess., Doec. 9119 (A21-Minutes P/1-12), at 37 (1974) (hereinafter cited as 21st Minutes], although the seat was originally granted in November 1971. Id. at 65 (statement of Chief Delegate of the People's Republic of China). In this speech, the Chinese also criticized the lack of Third World representation on the Council. Id. at 66. China has held a category [ Council seat since 1974. See Appendix. The Soviet Union, absent by its own choice from the ICAO since the Chicago Confer- ence, participated as an observer in 1965, 20 ICAO BULL. 3 (1965), but did not finally participate in the Council until 1971, the first election following its admission to the ICAO. See Appendix. Saudi Arabia was the only other state to decline the American invitation to participate in the Chicago Conference. PROCEEDINGS, supra note 2, at 13. 16. The Soviet Union has held a category I seat without interruption since its election. See Appendix. China has occupied a seat in category II for the last three elections. See id. Interestingly, the Kuomintang had held this status in 1947. when it still ruled a substantial 1981 ICAO COUNCIL: REFORM

West also seemed to be suited for the East. The Third World, however, remained underrepresented on the Council, cheated by history in the first category and by geography in the second.' Regional representation has since become the sole criterion under which most of the world's states can aspire to a Council seat, and the election procedure has become bottom- heavy with states seeking appointment in the last round.'6 After a brief review of the Council's duties, this Article next turns to earlier attempts to create international aeronautical bodies-interesting examples of roads not taken by ICAO to achieve the goal of fair representation. Then the problems that have emerged since the ICAO's conception will be considered. Finally, possible solutions to the problem will be explored, with a comprehensive proposal for a new article 50(b) to amend the Chicago Convention.

II. THE PROBLEM IN THEORY: THE COUNCIL AND THE CHICAGO CONVENTION

The ICAO Council is the governing body of the organization, currently comprised of 33 member states," drawn from the 150 members of the ICAO and elected by its Assembly at three-year intervals 3 0 Article 50(a) of the Chicago Convention provides that "[the Council shall be a permanent body responsible to the Assembly," thus preserving at least

area of mainland China, but from 1950 onward never held a Council seat, in contrast to its tenure on the U.N. Security Council. See id. 17. See Appendix. Most Third World nations have the misfortune not only to be less advanced themselves, but also to be isolated from routes between more aeronautical nations. Exceptions are some of the southern states of Asia, and isolated cases like Senegal, which lies on the main routes from Europe to South America. Senegal has held a category III position since 1968. See id. Its candidacy for category II in the most recent election was unsuccessful. Report of the United States Delegation to the Twenty-third Session of the Assembly of the International Civil Aviation Organization, Montreal, Canada, (Sept. 16-Oct. 6, 1980), at 24-25 (1980) [hereinafter cited as 1980 Report]. 18. In 1977 and 1980, only ten states sought election to the ten seats available in category I. ICAO Assembly, 22d Seass., Doc. 9216 (A22-Minutes P/1-13), at 121 (1977) [hereinafter cited as 22d Minutes]; 1980 Report, supra note 17, at 24. Although no real choice existed in 1977, Canada received 110 votes from the 119 states voting while Australia only got 93. 22d Minutes, supra, at 122. In 1980, the vote ranged from 122 of 127 votes for France to only 107 for the United States. 1980 Report, supra note 17, at 24. In the same year, 17 candidates competed for 11 category 11 seats, while 14 candidates sought the 12 available in category I1. Id. at 24-25. In 1977, 14 states vied for 10 seats in category II and 13 for the same number in category II. 22d Minutes, supra, at 123-27. In 1974, 11 states ran for 10 category I places, 12 for the 10 in category II, and 13 for the 10 in category III. 21st Minutes, supra note 15, at 93-99. 19. The membership has recently been increased from 30 to 33. See notes 129-31 infra. 20. "An election shall be held at the first meeting of the Assembly and thereafter every three years, and the members of the Council so elected shall hold office until the next following election." Chicago Convention, supra note 1, art. 50(a). In 1980, 134 of the 146 members attended the twenty-third Assembly. 1980 Report, supra note 17, at 1. As of December, 1981 the ICAO membership had increased to 150 members. 36 ICAO BULL. 34 (Nov. 1981). DEN. J. INT'L L. & POL'Y VOL. 11:51

the illusion of subordination to the universal body."' But the Convention itself, the actual Constitution of the ICAO, goes on to designate a number of critical duties that the Council either must or may perform.'2 In addition, because of the infrequent meetings of the Assembly, it has been necessary for the Council to assume routine and unusual functions that the Chicago conferees may not have intended without the direct supervision of the Assembly.2' The Council's role combines executive, judicial, administrative, and even "legislative" elements to the extent possible under states' obligations to the ICAO. The executive role is laconically stated in article 54(b): to "[clarry out the directions of the Assembly and discharge the duties and obligations which are laid on it by this Convention."" Other duties that might more logically have been granted to the Assem- bly are enumerated, such as the appointment of a Secretary-Generals " and the delegation of whatever duties it deems appropriate to the Air Navigation Commission, in addition to those established by the Convention." Such powers appear to reflect more than a mere executive authority. The ability to build directly upon the provisions of the Convention, without prior approval of the Assembly, especially suggests the Council's status as a primary rather than secondary source of authority. In addition to these functions, most routine procedures, such as the reporting and investigation of infractions of the Convention or of problems in international aviation, are in the Council's domain. 7 In the executive area, the Council adopts the international standards and recommended practices that are ICAO's primary product. 8 In its administrative capacity, it controls the finances of the organization." Finally, it convenes the Assembly for both its routine meetings and any extraordinary sessions that may be required.' 0 The breadth of these powers is especially remarkable given the lack of success of international aeronautical bodies during the twenty-five years prior to the Chicago Convention. These bodies faced many of the representational problems confronted at Chicago, and their history demonstrates that the 1944 conference had little precedent to guide it in the attempt to create a global aeronautical agency.

21. Chicago Convention, supra note 1, art. 50(a). 22. Id. arts. 54 & 55. 23. See T. BUERGENTHAL, supra note 2, at 184-97 for a description of adjudicatory activities. See also J. SCHENKMAN, supra note 15, at 159-62 for a description of powers. 24. Chicago Convention, supra note 1, art. 54(b). 25. Id. art. 54(h). 26. Id. art. 55(b). 27. Id. arts. 54(i)-(k), 55(e). 28. Id. art. 54(1). 29. Id. art. 54(f). 30. Standing Rules of Procedure of the Assembly of the International Civil Aviation Organization, Doc. 7600/3, Rules 1 & 2 (3d ed. 1977) [hereinafter cited as Assembly Procedure]. 1981 ICAO COUNCIL: REFORM

A. Pre- War Aviation Organizations Within a generation of Kitty Hawk, aviation had developed to the point where nations saw the need for international cooperation in civil aeronautics. The necessary impetus developed in the wake of World War I, which had convincingly demonstrated the limitless future of the air- plane. In 1919, the Aeronautical Commission of the Peace Conference of Paris produced the first major multilateral agreement on aviation, the Convention for the Regulation of Aerial Navigation." This agreement created the interwar forerunner of PICAO and ICAO-the International Commission for Air Navigation-generally known as CINA from its French acronym.3' The Aeronautical Commission, parent of CINA, reflected the division of power among the victorious allies: France, Italy, Japan, and the British Empire held two seats each while Belgium, Brazil, Cuba, Greece, Portugal, Romania, and Yugoslavia were accorded one each. 8 By 1929, however, the representation within CINA had been equalized, thus shedding the last vestiges of the Commission's influence." India and the British Dominions acquired separate votes, and the four great powers on CINA (of which the United States was not a member) gradually lost their voting advantages.8 5 Subsequent to that event, it appears that CINA functioned on a basis of uniform equality. CINA was concerned essentially with "public" international air law-the rights and duties of states to one another-and thus played a role roughly analogous to the present ICAO. In 1926, an organization concerned with international aspects of private air law was created: the ComitO International Technique d'Experts Juridiques A6riens, more conveniently known as CITEJA.31 CITEJA was not private in the sense that it was composed of private members, as is the modern International Air Transport Association (IATA), whose parent organization existed along- side CINA and CITEJA.8' Rather, it resembled a kind of specialized international American Law Institute composed of experts in the field representing governments in an effort to harmonize private air law." Although CINA was certainly the more important organization, CITEJA's membership included such states as China, Egypt, Germany, Turkey, the

31. Done at Paris, Oct. 13, 1919, entered into force July 11, 1922, SEN. CoMM. ON FOR- EIGN RELATIONS, 3 TREATIES, CONVENTIONS, INTERNATIONAL AcTs, PROTOCOLS, AND AoREE- MaNTS BETWEEN THE UNITED STATES AND OTHER PowERs, 1910-1923, Sen. Res. 130, 67th Cong., 2d Sess. 3768 (C.F. Redmond comp. 1923) (hereinafter cited as III Redmond], 11 L.N.T.S. 173 (1920). See also K. CoLOROvE, INTERNATIONAL CONTROL OF AVIATION 55-65 (1930); L. TOMaS, INTERNATIONAL ORoANZA'ION IN EUROPEAN AIR TRANSPORT 42-43 (1936); J. SCHENKMAN, supra note 15, at 39. 32. K. COLEoROVE, supra note 31, at 66; L. Tomas, supra note 31, at 43-45. 33. L. TOMBS, supra note 31, at 42 n.1. 34. Id. at 47. 35. Id. at 48. 36. Id. at 125; K. COLEOROVE, supra note 31, at 98-104. 37. See J. SCHENKMAN, supra note 15, at 51. 38. K. COLEGROVE, supra note 31, at 98; L. TOMas, supra note 31, at 125-26. DEN. J. INT'L L. & POL'Y VOL. 11:51

United States, and the Soviet Union, whose absence from CINA prevented that organization from transcending an essentially local European status.3' Neither CINA nor CITEJA, however, achieved the ICAO's level of universality or its problems of intra-organizational representation. The goals of the interwar organizations, while broad in rhetoric, lacked the immediate and practical scope of ICAO's purpose. Several major states were absent from one or the other body, depriving them of even a sem- blance of universality. Perhaps most importantly, CITEJA and CINA did not have to accomodate the emerging nations of the South. The few developing countries that achieved independence before World War II were tacitly expected to identify with basically European goals and procedures, as if this adjustment were the axiomatic price of autonomy. This has proven to be a basic rift between the North and the South, and it will continue to trouble the ICAO as long as representational criteria remain as originally drafted in 1944. B. The Chicago Convention Despite their apparent failure to allow for the future expansion of the organization's membership, the negotiators in Chicago devoted a considerable amount of time to the question of representation on the Coun- cil.' 0 Three questions were involved: the number of states to be elected to the Council, the definition of the categories in which they were to be elected, and the division of the elected states among the categories. Al- though the Convention ultimately produced a figure of twenty-one for the total,'1 the Canadian delegation suggested as few as twelve-eight from among the most important aeronautical states and four elected from other regions by the Assembly."2 The American proposal set the figure at 4 fifteen. " The breakdown of the categories and the number of seats allotted to each were also discussed. Article 50(b) of the Chicago Convention now reads: In electing the members of the Council, the Assembly shall give adequate representation to (1) the States of chief importance in air transport; (2) the States not otherwise included which make the largest contribution to the provision of facilities for international civil air navigation; and (3) the States not otherwise included whose designation will insure that all the major geographic areas of the world are represented on the Council."

39r L. TOMBS, supra note 31, at 43-52. 40. See PROCEEDINGS, supra note 2, at 102-06, 132-37, 469-70, 1298-1349, 1388-89. 41. Chicago Convention, supra note 1, art. 50(a). See Appendix where the total members of each Council islisted. 42. PROCEEDINGS, supra note 2, at 67. 43. Id. at 562. See also id. at 1317. 44. Chicago Convention, supra note 1, art. 50(b). 1981 ICAO COUNCIL: REFORM

The language of this section invites numerous constructions, particularly in the first category. Does "chief importance" imply the most far- flung airlines, the greatest numbers of international passengers, or the largest manufacturing industries? Apparently the conferees relied on the redundancy of most of these criteria to avoid confusion, and on the elec- tors themselves to decide appropriate interpretations. Most states in category I have always been in that class, and have always been elected to the Council. These include Brazil, Canada, France, the United Kingdom, the United States, and since its admission to the ICAO, the Soviet Union. 5 All but the U.S.S.R. participated in "the Chicago Conference and were members of the Interim Council of the Provisional International Civil Aviation Organization' (PICAO). 46 While these six states include those whose international airlines are among the world's largest, the most striking common characteristic is their domination of the commercial aircraft market. West Germany, which has held a category I seat in the last five Councils, also seems to have joined this elite group." The only other states to have been elected in the first round have been other Western European countries, Australia, and Japan."" Category I, except for Brazil and the Soviet Union, has remained the exclusive domain of the First World. It is doubtful that the conferees intended to concentrate power irrev- ocably in the industrialized West. It was logical that the states of "chief importance" be represented on the Council. Yet the formal recognition of this elite group raises one of the fundamental dilemmas facing all international representative bodies: the conflict between the realities of the international scene and the sovereign equality of states. The problem is less acute in generalized bodies like the United Nations, where representational equality is a more practical standard, given the broad spectrum of issues that such organizations must confront. But Burundi or Guyana will never wield the aeronautical might of the United Kingdom or the Soviet Union. The present structure of article 50(b) attempts a compromise between the elements of eminence and equality, but the compromise no longer seems feasible in light of the new political influence of the South. Even in 1944, states perceived that a separate designation of the most important states could eventually breed resentment. Portugal proposed the intriguing definition of states "which have attained the largest development in civil aviation." This could be interpreted to refer to the greatest relative progress rather than to the most advanced absolute status.4" Cuba and Mexico advocated a fifteen-member Council elected simply with "adequate representation" to the most developed states and to

45. See Appendix. 46. PICAO MONTHLY BULL., Nov. 1, 1946, at 3. 47. See Appendix. 48. Id. 49. PROCEDINGS, supra note 2, at 469-70. DEN. J. INT'L L. & POL'y VOL. 11:51 regional diversity.50 The U.S. proposal attempted to sidestep the problem of establishing categories while committing the Council to permanent great power representation. The fifteen members would be selected strictly on a regional or national basis: two each from the United States, the Soviet Union, and the British Commonwealth; one each from Brazil, China, and France; three from Europe, two from Latin America, and one from Africa and Asia together."1 Even given that the proportions would obviously have been changed in view of the newly independent countries, the proposed system would have been unduly discriminatory and restrictive. One of the most thoughtful proposals of the Chicago Conference was sponsored by Australia. Australia and New Zealand together championed the radical step of placing all international aviation under communal international ownership and operation.6s While more visionary than practical, this suggestion reflected the enlightened attitude of two small states active in the aviation field. Australia set out five criteria for Council membership, further refining the classifications presently in article 50(b). While ignoring the need for geographic diversity, the proposal broke category I into four elements: the largest operators, the "users," the "countries which have pioneered in the aviation field," and countries contributing to aviation design and engineering.5' Even though the latter two seem to overlap, the final element neatly isolates the power that has lurked behind the thrones of the perennial first-class states: the manufacturers and designers. Thus under the Australian plan, the separate pigeon-hol- ing of these elite states would have conceivably freed other category I seats for a wider spectrum of members, both in absolute numbers and in "upward mobility" like that enjoyed by West Germany and Japan." Ultimately, however, the twenty-one member, three-category plan was adopted. 65 It was then necessary to determine how the seats were to be apportioned among the three categories. Initially, the Executive Com- mittee unanimously established an 8:5:8 ratio." This was later changed to an 8:7:6 apportionment, resulting in an apparent loss in regional diversity.657 It is important to remember that these divisions have two effects: one on the ultimate composition of the Council, and the other upon the order in which states may run for election. Thus, a shrinking number of seats actually affords category III states the opportunity to run three

50. Id. at 1337. 51. Id. at 562. 52. Id. at 79-83. 53. Id. at 1345. 54. Movements of states between different categories may be determined from the table of Council membership. See Appendix. 55. PROCEEDINGS, supra note 2, at 1348. 56. Id. at 102. 57. ICAO Assembly, 1st Seas., Doc. 4259 (AI-P/29) (1947). This suggestion by the first Commission was adopted by the Assembly. ICAO Assembly, 1st Seas., Doc. 4346 (P.M.5 Minutes) (1947). 1981 ICAO COUNCIL: REFORM times, with the final election held between the losers in the first two rounds. 56 Relatively few Third World states have pitted themselves against the aeronautical superpowers in category I, but a number run in both second and third races. It is interesting to see just how much states have found themselves forced to adopt tactics that were clearly not envisaged by the drafters of the Convention, in order to gain a Council seat.

III. THE PROBLEM IN PRACTICE: THE EXPERIENCE OF THE COUNCIL Within the nearly forty years since the Chicago Conference, there have been twelve Council elections. During this period there has been a substantial expansion of the international community. While the admission of the defeated Axis powers to the ICAO and later to the Council did not create any serious problems,i " problems have arisen regarding the ac- comodation of the newly established states. Many of these states have little to qualify them for Council membership other than their sovereignty. Nevertheless, this additional pressure has affected some of the older states. Dispossessed older states join underrepresented new nations in their dissatisfaction with the system. A. Which Class to Fly: Uncertainty in the North

In an ideal system, any given state should logically be eligible to contend in the same category from one election to the next. This principle naturally ignores both the imperfections of any functioning electoral process and the necessity for flexibility in view of changing circumstances. For these reasons a loser in one round is specifically entitled to run in the next.60 But over the long run, a state should find itself elected in the same category with relatively little variation, and in most cases this has happened. Several states, however, have not enjoyed such consistency, and the reasons reflect both the changed electorate and the growing inade- quacy of the current electoral criteria. Czechoslovakia has one of the poorer records in its attempts to gain election to the Council. Prior to 1965 it had been seated only once." In 1962, it failed in attempts for both category I and II seats. 2 In 1965, 1968, and 1977, Czechoslovakia ran in category II, but was unsuccessful." Only in 1974 did Czechoslovakia succeed in shedding its category III sta-

58. Assembly Procedure, supra note 30, rule 59. 59. See note 14 supra. 60. See Assembly Procedure, supra note 30, rule 57(c), which states that losers in first round may run in second. Similarly, rule 69 permits losers in either of first two rounds to run in the third. 61. See Appendix. 62. ICAO Assembly, 14th Sess., Doc. 8269 (A14-Minutes P/5), at 92 (1962) [hereinafter cited as 14th Minutes]. 63. ICAO Assembly, 15th Seas., Doc. 8516 (AlS-Minutes P/5), at 113, 116 (1965) [hereinafter cited as 15th Minutes]; ICAO Assembly, 16th Sess., Doc. 8775 (AI6-Minutes P/1-9), at 76, 77 (1968) [hereinafter cited as 16th Minutes]; 22d Minutes, supra note 18, at 123. DEN. J. INT'L L. & POL'Y VOL. 11:51 tus with its election in the second round.' 4 In 1977, in an unsuccessful bid to retain this hard-won position, Czechoslovakia declared its intention to run in category II, stating that as one of the founding States of the Organization and a Member of the Council for severial triennia, [Czechoslovakia] has a moral right to present its candidacy .... We believe that the results achieved by Czechoslovak civil aviation also justify our candidature: . . . [as] a producer of aircraft technology and equipment for the provision of air traffic services . . .. The first part of this claim apparently just alleges general contribution to aviation technology, but the second hints at direct qualification for category II: "provision of facilities for international civil aviation." Yet one wonders how many more aircraft visit Prague than Budapest, Vienna, or Bucharest. In fact, Czechoslovakia is buried in the heart of a continent whose major airports are far more essential to international aviation than any Czech facility, even if category I states are omitted. It would also seem that geography should block Czechoslovakia from category III because Europe is the last region to merit further representation for its own sake." Czechoslovakia's recent tenure has been determined by geopolitical rather than strictly geographical criteria. Although one of many European states, Czechoslovakia is the only eastern European nation, aside from the U.S.S.R., to have ever held a Council seat.' The eastern European group is by far the least numerous region of all the U.N. aggregations, but it apparently is regarded as deserving more than a single representative on the Council. Thus Czechoslovakia, situated amid the most sophisti- cated aeronautical region in the world, has retained a Council seat on grounds of geopolitical diversity. Although Australia has also shifted between categories, its career demonstrates a different aspect of the representation problem. Aside from the second and third Councils, whose membership was elected in a single pro forma procedure because there were as many seats as candidates,6" Australia has always held a seat in either category I or II." If

64. 21st Minutes, supra note 15, at 95. 65. Id. at 20. 66. In the early years of the organization, the argument for regional diversity was more valid because so few African and Asian states were members. The limited number of category III positions permitted more representation from the Americas and Europe. From 1956 to 1959, the eve of widespread Third World independence, three European countries held seats in category III. Two elections later, in 1962, no European countries held category HI seats. See Appendix. 67. Yugoslavia was represented in category III in 1974 and 1977, but is not a member of the Eastern European bloc. See id. Poland ran for election in category II unsuccessfully in 1980, but declined to run in category Il. 1980 Report, supra note 17, at 24-25. 68. See ICAO Assembly, 4th Sess., Doc. 7016-3 (A4-Minutes P/2-3), at 73 (1950) [hereinafter cited as 4th Minutes]; ICAO Assembly, 7th Seas., Doc. 7409 (A7-Minutes P/2), at 58 (1953) [hereinafter cited as 7th Minutes]. See also Appendix. 1981 ICAO COUNCIL: REFORM unsuccessful in its bid for a seat in category I or II, Australia would be virtually guaranteed a seat in category III on geographical, not geopolitical, grounds.' Australia has been elected in category I for all but two full elections, when it was the closest runnerup."1 Why is Australia a state of "chief importance" in the aeronautical world? Its manufacturing capacity is negligible. Its population is comparable to that of Czechoslovakia or Kenya. Its airline is global, but carries fewer passengers on fewer aircraft than most western European systems. It lies well off the world's major air routes; few visitors to Australia are merely in transit to other points, unlike established category II states such as India and Lebanon. Wherein lies Australia's aeronautical importance? Foremost, of course, is the isolated continent's size and location. Few states are so remote from the rest of the world, and yet manage to maintain such close contact with it, largely via aircraft. Similar dependence upon and commitment to aviation characterize internal Australian transportation. But the bond between Australia and the other pioneers of aviation goes somewhat deeper-back to the original PICAO, when Australia, as one of the victorious Allies, participated extensively in the establishment of the organization." It is remarkable that the great influx of Third World states into the Assembly electorate has not yet resulted in Austra- lia's demotion from category I, in favor of some state less closely identifiable with the goals of the North, such as China. Both the Czech and Australian examples indicate certain failings of the present electoral criteria. Geopolitical rather than strictly geographical determinants are most appropriate in achieving the goal of diversity. Also, elements other than those enumerated in the Convention apparently enter into decisions to elect states like Australia to category I-elements that either should be formally sanctioned or eliminated altogether. The greatest problem, however, still lies in the undue burden on the few category III seats to provide representation of most of the planet's nations. B. Filling Third Class: North vs. South The Scandinavian nations long ago perceived that they were unlikely to win election to the Council individually, except perhaps in category III, and then only sporadically. Therefore, since the days of PICAO, they have been joined in a coalition to be represented by a single Council seat.

69. See Appendix. 70. Australia would almost certainly be excluded on geopolitical grounds since it is a member of the predominant Western coalition. 71. The two elections when Australia failed to make category I were in 1947 and 1971-the first and ninth Councils. ICAO Assembly, 1st Seas., Doc. 4351 (Al-Minutes P/39), at 2 (1947) [hereinafter cited as 1st Minutes; ICAO Assembly, 18th Seas., Doe. 8963 (A18- Min. P/1-16), at 89 (1971) [hereinafter cited as 18th Minutes]. 72. See, e.g., PROCMDINGS, aupra note 2, at 1345 (Australian proposal for category I criteria). See also notes 52-54 supra and accompanying text. DEN. J. INT'L L. & POL'Y VOL. 11:61

Except for the 1977-1980 term, Denmark, Sweden, and Norway'have ro- tated the post."' In 1977, the cycle was expanded with the election of Fin- land-formerly an "enemy state" and not a participant in the original Conference-to hold what has apparently become a traditional seat." Similar trends toward regional coalitions have since appeared elsewhere. In 1977, Honduras announced that it would run for a Council seat as a representative of the Central American states.' "As a Council member it would carry out the directives given to it by the Central American States, at the same time, of course, maintaining good relations with [the] ICAO." 6 Since 1959, all eight Councils have included a Central American country, but the region's cohesiveness seems to have been less convincing to the electorate than the Scandinavian coalition." Yet the Central Amer- ican states, none of which ran for seats until 1959, have at least avoided the obvious dangers of running against one another for a precious cate- 78 gory III seat. Under another subregional arrangement, Jamaica successfully ran for a category III seat as successor to Trinidad and Tobago in 1977, and retained the seat in 1980.7 In 1974 and 1977, Morocco was elected as a representative of "the Arab states of the Mahgreb." 0 Algeria succeeded it in 1980 "under an agreed rotational scheme."81 Even the Benelux countries, which among themselves have held nineteen seats on thirteen Coun- cils, have found it necessary to band together formally."' In 1977, the Netherlands announced that [Ijike other states before us, we have agreed on a rotation scheme covering membership in the Council and other standing bodies of the Or- ganization. We shall establish a common representation at ICAO Headquarters. Thus we intend to contribute to ICAO the pooled experience of three countries . . . .. Other States presenting much the same characteristics already have expressed their interest in this cooperation and may join at a later stage.8 Surprisingly, the Dutch then announced that the group would await the

73. See Appendix. 74. See id. 75. 22d Minutes, supra note 18, at 28. 76. Id. 77. See Appendix. 78. See id.; 1980 Report, supra note 17, at 24-25 (El Salvador the only Central Ameri- can candidate in 1980); 22d Minutes, supra note 18, at 126 (Honduras in 1977); 21st Min- utes, supra note 15, at 98 (Costa Rica in 1974); 18th Minutes, supra note 71, at 92 (Nicara- gua in 1971); 16th Minutes, aupra note 63, at 77 (Guatemala in 1968). 79. 22d Minutes, supra note 18, at 77; 1980 Report, supra note 17, at 25. 80. 22d Minutes, supra note 18, at 53. "Mahgreb" is an Arab geographic term, referring to Muslim North Africa, the usage of which predates the present day nation states of the area. For the purposes of this paper, the Mahgreb loosely includes Morocco, Algeria,- Tuni- sia, and perhaps Mauritania. 81. 1980 Report, supra note 17, at 25. 82. These figures include the PICAO Council. See Appendix. 83. 22d Minutes, supra note 18, at 56. 1981 ICAO COUNCIL: REFORM imminent establishment of three extra Council seats before submitting their candidacy.8' Despite these modest words, however, the Low Coun- tries' fear was apparent. With category III seats drifting inevitably to the South, a Scandinavian-type coalition was necessary. Nor would it be difficult to predict the identity of the other interested states: Switzerland, a partner in the KSSU consortiumSl; or possibly Greece, Austria, or Portu- gal-all small states with large airlines and a commensurate interest in aviation.as From the above coalitions a clear trend can be discerned. Obviously, states no longer feel that category III affords an adequate guarantee of representation. The formation of the coalitions was necessary to guarantee states with similar interests adequate representation now that an increasing number of states are seeking category III seats. This phenomenon has both advantages and disadvantages. Interna- tional cooperation at the local level is obviously desirable from both practical and diplomatic viewpoints, but the formalization of subregional representation presents some quasi-constitutional problems. The Chicago Convention makes no allowance for such arrangements, except in the ob- lique terms of article 50(b), and it would probably be stretching the intentions of the Chicago conferees to sanction subregional candidacies by that language. The prearranged candidacies remove the opportunity for the general electorate to determine which states are most suited for filling the Council's needs. Thus, the agreements arguably sidestep the spirit of the Convention by usurping a function of the electoral process. States voting against such candidacies may also fear to offend an entire group of states, despite the secrecy of the balloting. Such an onus, even self-imposed, represents a threat to the principles of representation, both as embodied in article 50(b) and as furthering the Council's work. Most of the more recent coalitions have taken a significant step beyond the Scandinavian model, in that several national airlines are involved. Scandinavia operates a single airline (SAS) out of Norway, Den- mark, and Sweden. The combined resources of these three countries has enabled them to operate an international carrier capable of competing with much larger countries.87 But the Scandinavian group now includes Finland, which operates its own international airline, Finnair. The Cen- tral American, North African, and Benelux nations all maintain separate national airlines, often directly competing in certain markets. Neverthe-

84. Id. 85. The KSSU consortium includes KLM (Netherlands), Swissair, oSAS (Denmark, Sweden, and Norway), and UTA (France). P. EDDY, E. PoatER, & B. PAME, DsrMNAroN DIsAsTER 112 (1976). 86. The inclusion of one of these states would create an interesting example of a geo- graphically divided coalition. Greece may be a likely candidate in view of its recent admission to the EEC. 87. SAS pioneered the polar route and nonstop flights from Europe to Alaska. thus cutting travel time to Japan significantly. DEN. J. INT'L L. & POL'o VOL. 11:51

less, the countries involved have been able to form effective coalitions for the purposes of the ICAO. Such cooperation is remarkable and demonstrates the common fear of underrepresentation among smaller states. This concern of underrepresentation ironically is shared by smaller states in both the industrialized North and the developing South. To the smaller countries of the North, the voting power in world organizations has been transferred to the newly independent South, giving rise to what disgruntled Northerners call the "mechanical majority": a teeming, de- pressingly uniform array of African, Asian, and even Latin American states. In the ICAO Council, the effect has been to absorb most of the category III seats that might otherwise have gone to the small states already long established.88 Conversely, in an organization where the voting procedures for Coun- cil elections already are weighted in favor of the developed countries (by virtue of the first two categories), the newer nations perceived the formation of coalitions as necessary to obtain a category III seat and thus gain a say in the affairs of the Council. Actually, Third World states are beginning to make inroads upon category II. Both Pakistan and Nigeria have recently reached category II, and as air traffic and facilities increase in the South, others will doubtless follow." While this may reduce the race for category III seats to some extent, it still provides additional impetus to combine into subregional coalitions. Perhaps the most uncertain effect of the trend toward group representation will be on the present political partition of the international community along regional lines. The Mahgreb group provides an interesting example of a subregion eclipsing a regional association for the purpose of obtaining a Council seat. The conflict among the Mahgreb states, traditionally an extremely bitter conflict, was apparently put aside long enough to insure representation. Yet conceivably, such action could represent a direct threat to other associated states who also sought category III election. For example, among the Arab League, Iraq and Saudi Arabia both competed with Algeria in 1980. The Saudis failed to win election, even after three ballots." Morocco and Algeria have also directly competed with other African states. Both Madagascar and Senegal also succeeded in 1977 and 1980, but the advantage the Mahgreb states possessed was obviously evidenced by the voting record. In 1980, Algeria topped the list with 110 votes, versus 77 for Madagascar and 76 for Senegal."9 In 1977, Morocco won 104 votes to Madagascar's 81 and Senegal's 76.9" Surely Senegal's proximity to the Mahgreb states played a part in per-

88. See Appendix. 89. See id. 90. 1980 Report, supra note 17, at 25. In 1977, Morocco was the only Arab League candidate in the third round. 22d Minutes, supra note 18, at 121-27. Lebanon and Egypt were both elected in category 11 in both years. See Appendix. 91. 1980 Report, supra note 17, at 25. 92. 22d Minutes, supra note 18, at 126. 1981 ICAO COUNCIL: REFORM suading relatively few non-African states to vote for both. 3 Although no clear trend can yet be defined, it is possible that subregional associations will eventually undermine unanimous regional action. If this does occur, the less developed South will suffer the most in their category III representation. The EEC can afford to tolerate collusion among its smaller members since its larger nations are likely to be elected in categories I and II. The same is true to a certain extent of the Central and South Americans." Africa, however, will face the dilemma of a multi- tude of states with only one or two guaranteed standard bearers."9 Thus, the use of subregional alliances to gain better representation would seem to be a logical development. The above developments indicate that membership criteria and the election process in the ICAO no longer function satisfactorily. Group representation is becoming increasingly popular and necessary among the Af- rican nations. The experiences of such diverse states as Australia, Czecho- slovakia, the Scandinavian countries, and the various LDC's suggest that only a half dozen or so dominant world states can ever be certain of a Council seat. It remains to be seen what revisions of the electoral criteria are in order.

IV. REVISING ARTICLE 50(B): TOWARDS A NEW SEATING CONFIGURATION

Two approaches to the problem are possible: treating the symptoms, which have been described, and borrowing from the other international organizations. Comparisons with other contemporary specialized agencies should provide some perspective on how ICAO's criteria might be changed. But an examination of an admittedly limited cross section of other organizations shows that their provisions either improve little on the present ICAO system or are impractical for other reasons. The analysis here briefly deals with four other institutions: the U.N. Security Coun- cil, the International Atomic Energy Agency, the International Labor Or- ganization, and the World Health Organization.

93. Senegal had an advantage, however, in that Dakar's airport is much more critical to world aviation than any in the Mahgreb. The African group is apparently trying to reduce the disruptive effect of subregional alliances. In 1980, a paper was circulated listing five states, including Uganda, as the group's candidates. 1980 Report, supra note 17, at 24-25. Tanzania then announced that it remained a candidate. After the first ballot, in which both it and Uganda lost, it offered to share its seat with its East African colleague. Id. at 25. 94. Brazil, Mexico, Argentina, and, lately, Colombia, have all held Council seats for unbroken periods. See Appendix. 95. Nigeria and Egypt, the two largest African states, have both held seats since independence. Ethiopia and Zaire, however, the two next largest, have never sat on the Council. See Appendix. DEN. J. INT'L L. & POL'Y VOL. 11:51

A. Contemporary International Organizations

1. U.N. Security Council The most obvious and prominent subject of comparison is the U.N. Security Council. Even though it retains certain archaic characteristics, the Security Council is probably the most powerful international body in scope of subject matter and delegated power." Like the ICAO, the United Nations and particularly the Security Council were the products of a wartime environment-a situation in which a few states were in control of the general state of international affairs." These states, specifically the Soviet Union, the United Kingdom, the United States, France, and China, were granted permanent seats on the Security Council."s In practical terms, the permanence of most category I states in the ICAO Council is not unlike these permanent Security Council seats. The formal quality of the permanent U.N. seats, however, has been reinforced enormously by the veto power vested in each one, probably the greatest single source of resentment among the other members of the United Nations." The om- nipotence of these five, albeit now under attack from many quarters, makes the Securty Council a somewhat static body-an unhealthy characteristic that would certainly be inappropriate in the rapidly changing field of international aviation. No source of reformation can be identified here. The other criteria for membership on the Security Council, spelled out in article 23 of the Charter,'"0 are remarkably similar to those in article 50(b) of the Chicago Convention. Instead of a category for states contributing to international civil air navigation, the Charter requires that regard be "specially paid, in the first instance to the contribution of Members... to the maintenance of international peace and security and to the other purposes of the Organization ... ,,o This proviso certainly contains elements of category I as well as category II, but the basic purpose more closely resembles the latter's-to buttress a hard core of powerful states with lesser nations whose contributions are still significant. The same article also requires attention to "equitable geographical distribution."'0' Although more concisely phrased, the obvious purpose is similar to the provision for category III.

96. The nature and powers of the Security Council are set out in the U.N. CHAamR, articles 23 to 32. The Security Council's power is distinctive in that it includes the right to employ armed force. Id. art. 42. 97. The meetings that started the process culminating in the foundation of the United Nations took place among the Allies even before Pearl Harbor, beginning with the Inter- Allied Declaration, signed June 12, 1941. U.N. OFFICE OF INFORMATION, EVERYMAN'S UNIra NATioNs 4 (8th ed. 1968). The history of the movement is summarized in id. at 4-10. 98. U.N. CHATER, art. 23, para. 1. 99. Id. art. 27, para. 3. 100. Id. art. 23, para. 1. 101. Id. 102. Id. 1981 ICAO COUNCIL: REFORM

Aside from the rigid preservation of the great nations' power, the Se- curity Council differs markedly in its procedures from the ICAO Council. Rather than stipulating separate elections in specific order, article 23 simply provides two elements for consideration in filling the remaining seats.10' This has two salutary effects that would make it a good practice for the ICAO. First, it prevents regimentation of states in particular categories, thus preventing them from becoming associated with a single distinctive quality. While it is true that a certain degree of upward mobility in the Council has been demonstrated by such states as Nigeria, Spain, and Lebanon, there seems to be no reason to impede the process at all as the present ICAO system does.104 Second, the Security Council scheme avoids the ICAO problem of strict apportionment of a certain number of seats to each category, which has led to unnecessary animosity between states in the various categories in the ICAO. Also, the United Nations permits greater latitude in election: rather than having to fit a specific category, a concept that the ICAO electorate has been forced to interpret rather broadly, the Security Council provision merely indicates appropriate considerations. The ICAO would be well advised to borrow this fea- ture of the article 23 process.

2. International Atomic Energy Agency The International Atomic Energy Agency (IAEA) includes a Board of Governors whose status is roughly comparable to the ICAO Council.0 5 While the two bodies differ in the frequency of their meetings and the size of the chief groups in each,'e the IAEA and the ICAO share the common characteristic of being dominated by a small number of states, even though all nations have an interest in the activities of the respective organizations. Therefore, the problems of apportioning seats on the Board between the few powerful states and the remaining states should be similar to those faced by the ICAO Council. The IAEA's version of category I is detailed and relatively unambigu- ous. The Statute provides for the five "members most advanced in the technology of atomic energy including the production of source materials ... ,0 Thus, even though their nuclear technology is less developed

103. Id. 104. See Appendix. 105. STATUTE OF THE INTERNATIONAL ATOMIc ENERGY AGENCY, opened for signature Oct. 26, 1956, 8 U.S.T. 1093, T.I.A.S. No. 3873, 276 U.N.T.S. 3, art. 6 [hereinafter cited as IAEA STATUTE]. 106. Id. See Von Mehren, The International Atomic Energy Agency: Challenge and Opportunity, 13 N.Y.B.A. Rac. 56 (1958) where it states that there should be no more than 25 members. A variable number of member states, presently about 35, is discussed in F. KIRGIS, INTERNATIONAL ORGANIZATIONS INTHEIR LE.GAL SLrnNo 14 (1977). In 1958 the ICAO Council had 21 members; presently it has 33. See Appendix. 107. IAEA STATUTE, art. 6, para. A-1. An interesting example of a proposed international body whose function would directly reflect geographical factors is the International Seabed Resource Authority, suggested in the August 3, 1970 United States Draft Conven- DEN. J. INT'L L. & POL'Y VOL. 11:51 than that of other states, Canada and Niger are presumably potential members of this group because of their high production of uranium. The IAEA then proceeds to combine elements of expertise and geography, by providing that "the member most advanced in the technology. . . in each of the following areas not represented by the aforesaid five" shall be appointed, listing various regions. 0 8 This list roughly conforms to the general U.N. divisions, but includes some interesting variations. Parts of Asia are included in four of the eight groups: Africa and the Middle East, South Asia, Southeast Asia and the Pacific, and the Far East.' °" Thus South Asia, by process of elimination, basically consists of the Indian subcontinent; and within this region, it is virtually certain that India would fill the seat. After these sections establish the inner circle of nuclear powers, the Statute becomes much more intricate. The next part grants the smaller states of Europe, important technologically, a special means of representation. Although rather poorly phrased, this section allows "two members from among the following other producers of source materials: Belgium, Czechoslovakia, Poland, and Portugal; and [the previous Board] shall also designate for membership on the Board one other member as a supplier of technical assistance.'"' 0 These provisions seem rather artificial, as if established either to rectify some problem with the basic system or as the result of successful lobbying by the states favored. It is, of course, no co- incidence that two of the states are from the Communist bloc and the other two are from Western Europe. Perhaps the greatest virtue of article 6, paragraph A-2 lies in the fact that it guarantees a certain minimal degree of representation by the two opposing factions of the developed world."' The next section departs from the tenor of the first two, in which the Board designated its successors.' This third section provides that "[tihe General Conference [IAEA's Assembly] shall elect ten members. . . with due regard to equitable representation on the Board as a whole of the members of the areas listed. .. so that the Board shall at all times in-

tion on the International Seabed Area, reprinted in SENATE [NTFIOR COMM., 91ST CONG., 2D Sass., REORT ON THE OUTER CONTINENTAL SHELF, part 111, at 71 (1970). Article 36 of this convention would establish a council of 24 contracting states, of which 6 would be the "most industrially advanced" and 12 of the remaining 18 would be "developing countries." See L. JUDA, OCEAN SPACE RIGHTS 217 (1975) for the text of the American proposal. The usual "need for equitable geographical distribution" is noted, but a unique provision would require at least 2 of the 24 to be "landlocked or shelf-locked countries." Id. Apparently, the geographical character of the Authority would remove the need for specifically defined geographic representation beyond these skeletal provisions, at least from the viewpoint of the United States. 108. IAEA STATUTE, art. 6, pars. A-1. 109. Id. 110. Id. art. 6, pars. A-2. 111. This provision has -the effect of perpetuating an East-West rather than North- South orientation. 112. IAEA STATUTE, art. 6, pars. A. 1981 ICAO COUNCIL: REFORM elude in this category a representative of each of those areas except North America."113 At first a conventional geographical category like ICAO's category III, this section takes a truly bizarre final twist. It reflects the fact that under the IAEA's rather awkward regional partition of the world, there are no other major North American states besides the United States and Canada, both of whom will already have been designated as members of the Council."' In this section, the Statute openly discrimi- nates against a region that should not have been defined as such in the first place. It further complicates an already labyrinthine process. Finally, as if painfully aware of the inadequacies of this procedure, the Statute forbids the consecutive reelection of any state in the geographical category.I15 The IAEA system must rank as the most convoluted and unwieldy of all. In an apparent effort to insure fair representation in an organization concerned with this most volatile of issues, the IAEA overshoots its goal considerably. Its best features, and those which the ICAO might adopt, consist of omissions rather than innovations. The most prominent is the lack of a category II, which the Security Council and the ICAO Council both include, comprised of states halfway between important and representative. It is difficult enough to harmonize these two elements without fostering a third intermediate rank, and even the drafters of the IAEA Statute seemed to perceive this.

3. InternationalLbbor Organization

One of the oldest and most distinctively composed organizations is the International Labor Organization (ILO). The Constitution of the ILO calls for a Governing Body of thirty-two members, roughly the same as the IAEA or ICAO, but there the resemblance ends."1 ' The 32 are broken down between governments (16), employers (8), and workers (8)-an arrangement required by the character of the organization."' But within each of these groups, familiar criteria are found. In the governmental delegation, logically the most appropriate for comparison to the Council, eight are from "the Members of chief industrial importance" and eight are elected by the Conference."' The only geographical criterion is the startlingly lax limitation on concentration in one area-no more than ten of the sixteen may be European."' Theoretically this means that Europe alone could hold an absolute majority of government seats. The section

113. Id. art. 6, pars. A-3. 114. The U.N. organizations have solved this problem by placing Canada and the United States with Western Europe, Australia, and New Zealand. 115. IAEA STATUTE, art. 6, pars. A-3. 116. CONSTITUTION OF THE ILO, art. 7, entered into force Apr. 20, 1948, 62 Stat. 3485, T.I.A.S. No. 1868, 15 U.N.T.S. 35 [hereinafter cited as ILO CONSTITUTION). 117. Id. art. 7, pars. 1. 118. Id. art. 7, pars. 2. 119. Id. DEN. J. INT'L L. & POL'Y VOL. 11:51 regarding employers and workers is even more lenient: only two of each eight members need come from outside Europe.1s0 These minimums do not set any upper limit to the number of non-European representatives, and it is safe to assume that the electorate would take appropriate notice of geopolitical considerations in the absence of any contrary restraint.' The ILO comparison is also helpful because the ILO is a hybrid organization with a number of nongovernmental activities represented. If the ICAO and IATA ever merged into a single organization, the resulting entity might be similar. But since the Chicago Convention kept the administration of safety and technology separate from economic matters, the latter have remained the subject of bilateral negotiations between states.!12 Nevertheless, to a certain degree private entities such as IATA, the Airport Associations Coordinating Council, and the International Council of Aircraft Owner and Pilot Associations (IAOPA), do participate in ICAO affairs as nonvoting observers."83 The problems of accommodat- ing such agencies in an organization comprised of sovereign states would outweigh the benefits of their participation, at least until a radical change in the economics of international aviation occurs. The ILO's lack of geographical strictures would not be a helpful in- novation for the ICAO. In the ICAO context, the representation of states by geographical region is and should continue to be fulfilled by electoral action rather than by allocation of seats to geographical areas. In this respect, both the ILO and ICAO contrast with the IAEA, but the ILO can contribute nothing new to the ICAO system.

4. World Health Organization Election to the Executive Board of the World Health Organization (WHO) is determined by probably the loosest criteria of all international

120. Id. art. 7, para. 4. This heavy concentration on Europe can be attributed to several factors. When the ILO was founded, well before World War II, all the states of major industrial significance were European, except the United States. In terms of population involved in industry this is still somewhat true, although Japan, Brazil, and the Old Commonwealth are rapidly developing working masses similar to those in Europe and the United States. 121. See ILO CONSTITUTION, art. 7, para. 4 which sets out the election procedure to be followed. 122. See note 2 supra. 123. At the 1980 Assembly, 17 international organizations were represented by observers. Six were regional aviation bodies: the Arab Civil Aviation Council (ACAC), the African Civil Aviation Commission (AFCAC), the Agency for the Security of Aerial Navigation in Africa and Madagascar (ASECNA), the Central American Air Safety Services Corporation (COCESNA), the European Civil Aviation Conference (ECAC), and the Latin American Civil Aviation Commission (LACAC). Labor organizations included the International Feder- ation of Air Line Pilots' Associations (IFALPA), the ILO; and the International Transport Workers' Federation (]TF). Other aeronautical groups were the Airport Associations Coordi- nating Council (AACC), the International Aeronautical Federation (FAI), the International Air Carrier Association (IACA), the International Air Transport Association (IATA), and the Institute of Air Transport (ITA). Also present were the Organization of African Unity and the Palestine Liberation Organization. 1980 Report, supra note 17, at 3. 1981 ICAO COUNCIL: REFORM organizations. The Constitution of the WHO requires only that "the Health Assembly, taking into account reasonable geographical distribution, shall elect the Members entitled to designate a person to serve on the Board."11 2' There are no limits on geographical distribution, reelection, technology, or eminence in the area of medicine or public health. The individuals (as opposed to their sponsor states) need only be "techni- cally qualified in the field of health. '"'O The WHO system is certainly the simplest of the international organizations examined. It shows a faith in the lack of political manipulation or prejudice that logically should attend deliberations in its area, thus eliminating the need for representational safeguards. The universal international interest in the world's health should override such considerations. Whether this trust is justified is not at issue here. Such trust would certainly be unjustified in the ICAO's case. Unlike the health area, aviation is an arena in which nations compete for economic and nationalistic purposes, and in such an environment, guarantees of fair representation are essential. The utopian model of the WHO system may be the object of envy, but hardly of emulation. Many other organizations might be examined, and this selection is far from being even representative. But this brief overview does provide a sketchy picture in which organizations are either struggling with the same problems as the ICAO, or are not valid subjects of imitation because of their composition or subject matter. The Security Council and a few other bodies dispense with the ICAO's intermediate category II. An analysis of the ICAO's own affairs would also lead to the conclusion that this class is now unnecessary. For the ICAO, improvements must spring more from the organization's own experience than borrowed wholesale from other entities. B. ICAO Action The ICAO Council and Assembly themselves have not failed to perceive the inadequacies of the original composition of the Council, but their efforts to improve the situation have been too superficial to fill the need. As it now exists, revisions can be made at two levels. Relatively minor changes of a procedural nature can be achieved within the organization through the Assembly's Rules of Procedure." 6 Such action requires no ratification because it is within the authority delegated under the Chi- cago Convention.-" More fundamental changes which actually alter the Convention are necessarily treated as minute conventions in their own

124. CoNsrITrION O Tm. WORLD HEATm ORGANIZATION, art. 24, opened for signature July 22, 1946, 62 Stat. 2679, T.I.A.S. No. 1808, 14 U.N.T.S. 185 [hereinafter cited as WHO CoNsTWUTIONJ. 125. Id. 126. Assembly Procedure, supra note 30, rule 67. 127. Id. The Assembly is authorized to control its procedures. Chicago. Convention, supra note 1, art. 49(d). DEN. J. INT'L L. & POL'Y VOL. 11:51 right. These require the tedious process of Assembly vote (by a two-thirds majority) and subsequent ratification by a sufficient number of states.'" At this level, the ICAO has enlarged the Council occasionally in a haphazard attempt to keep up with-the expanding membership. This expansion has not been sufficient to maintain the original ratio of Council seats to member states. In 1944, the Convention established 21 seats on the Council; 52 states participated in the Conference.' In 1980, the last year in which a Council was elected, 33 seats were filled by 133 voting states.'8 0 While the organization has more than doubled in size, the Coun- cil has grown by only 57%.111 Increases in absolute size, while logical to preserve a reasonable ratio, are fraught with other risks. Beyond a certain limit, which the Council is rapidly reaching, such a body begins to lose its character as a small, executive, efficient entity, and starts to resemble unwieldy universal bodies like the various assemblies. Further increases will detract from the Coun- cil's streamlined character, while significantly improving the representational ratio. The original ratio of Council seats to member states was 2:5, the high proportion reflecting the low number of sovereign states at that time. To achieve the same ratio now would require a Council of nearly fifty, comparable to the original size of the Assembly. " " The answer to improving the Council's representative quality does not lie in trying to regain the original ratio of members to Council seats, but rather in revising the methods of filling the existing positions. Modest increases in size and revisions of the number of seats in each category-the two tactics the ICAO has attempted thus far-have failed to solve the problem. Instead, a wholesale revision of article 50(b) of the Chicago Convention should be adopted, one that would alter the electoral system permanently to deal with any foreseeable changes in the international community.

V. AN ALTERNATIVE APPROACH AND RECOMMENDATIONS The three basic aspects of the representation problem remain the same as in 1944: how many states, in what categories, and according to

128. Chicago Convention, supra note 1, art. 94. 129. See PROCEEDINGS, supra note 2, at 29-41 for a list of participating delegates. 130. 1980 Report, supra note 17, at 25. One hundred thirty-three states voted in the third category, 126 in the second, and 127 in the first. Id. at 24-25. 131. The first increase took place at the first extraordinary session of the Assembly ever to be held, in June 1961. 16 ICAO BULL. 99-102 (May 1961). There was at first some argument over whether the new figure should be 25 or 27, but the higher number won greater support. Id. at 101. The measure was ratified by enough states to elect a 27-member Council in 1962. 17 ICAO BULL. 193 (Oct. 1962). The second increase was accomplished in 1973. See note 7 supra. The third increase, from 30 to 33, was not reflected in a full Council election until 1980, but was approved at the 1974 Assembly meeting. 21st Minutes, supra note 15, at 125-28. See Appendix where the totals for each Council are listed. 132. See text accompanying note 128 supra. When the 1980 Assembly convened, there were 146 contracting states. 1980 Report, supra note 17, at 1. 1981 ICAO COUNCIL: REFORM which ratio. The solution to the first problem is perhaps the simplest of all. The most appropriate device for determining the number of Council seats is a simple percentage of the total number of member states, with a ceiling if the number should grow too large. A ratio like the original 40% would be too large; a level of 20% would be optimum, particularly with a large number of sovereign states to ensure a Council of at least twenty or twenty-five nations. This arrangement would reduce the present Council to its pre-1980 size of about thirty, if all the world's sovereign states were members. The loss of three or more seats added in past years would be more than offset by other measures designed to improve Third World representation. If few dependent areas remain to swell the ranks of nations, this provision would seem tardy and superfluous. But it is entirely possible that yet another generation of states may acquire sovereign status, particularly under pressures from the South for universal autonomy. At least fifty more potential "microstates" exist, scattered across the Caribbean, In- dian, and Pacific regions.1ss The growth of vociferous minorities in many larger countries--the Kurds, Basques, Croats, and Eritreans of the world-also suggests another potential source of third-generation states. Even states the size of Pitcairn Island, whose population would fit com- fortably on two city buses, have been seriously proposed as candidates for independence. ' The unpredictability of these factors requires both a percentile formula for representation and an absolute ceiling upon the total that may be reached. Specific limitations upon microstate representation would be politically unacceptable as a rejection of the principle of equality of states. Placing a ceiling on Council membership as a whole would have the effect of reducing the numerical influence of microstates to reasonable proportions, without actually designating them as third-class nations.18 The most suitable ceiling figure should fall in the neighborhood of thirty-five. This size avoids the creation of too large a body while still allowing for future expansion of the international community. A limit of thirty-five would allow about three dozen more states to join ICAO without eroding the ratio of 20%. An increase beyond 175 would then be equally absorbed by existing states. The next question is the division of seats by category. The most nec-

133. These microstates may arguably have a disproportionately large interest in aviation, as the primary means of communication and transportation. Those already independent have not hesitated to participate in ICAO. 1980 Report, supra note 17, at 1-2 lists the following states: Barbados, Cape Verde, Fiji, Maldives, Nauru, Saint Lucia, SAO Tome and Principe, and Seychelles. See generally E. PLISCHKE, MICROSTATES IN WORLD A&pAI S (1977). 134. Many Pacific Islands have achieved a degree of autonomy consistent with their size and interests, and it seems doubtful that such areas will campaign hard for full independence. See 1980 Report, supra note 17 at 37-38, 37 n.25. 135. Presumably undue numerical influence would be reflected in the votes of other states. DEN. J. INT'L L. & POL'Y VOL. 11:51 essary revision should abolish the category II states "which make the largest contribution to the provision of facilities for international civil air navigation."'I' Several factors justify this adjustment. Most obviously, aircraft are now sufficiently advanced that, with very few exceptions, airlines do not stop at points merely to refuel or otherwise break their jour- neys. s7 Even the transit function, by which points serve as connections between flights, is becoming less significant as airlines provide more direct service. Navigational equipment is no longer a major problem in the expansion of the industry and in the maintenance of flight safety. To the degree that these factors still justify representation on the Council, states should be able to win election in either category I or III. Category II has become unnecessary. The abolition of the. seats in category II provides much more room for representation in the other two categories, without increasing the size of the Council. Category I should remain more or less as it is, except that two subdivisions should be established: one comprising states preeminent in the technology and manufacture of aeronautical products, and the other comprising states prominent in the air transport area."8 ' The size of the category should be expanded to 40% of the total Council membership, which would produce a category of twelve seats. Six would inevitably and necessarily go to the great aviation powers, but the other six would afford an opportunity for emergent aviation states to gain representation in this class. For example, India, an undeviating category II state so far, could well aspire to such a position."" The most delicate question of all is still the representation of the Third World states. If the size of the Council remains at about thirty, approximately eighteen seats will be filled from the remaining nations of the world. A single election is still in order, but with two stipulations. Geographic diversity should remain a general criterion regardless of which states have been elected in category I, thus avoiding discrimination against the smaller states of Europe and North America."10 Electing countries should, however, enjoy the discretion to determine appropriate proportions, without the strictures of a specific regional breakdown as found in the IAEA. 1 Second, for purposes of election to the Council only, coalitions of states should be recognized as single states, as long as the coali-

136. See Chicago Convention, supra note 1, art. 50(b). 137. The advent of the Boeing 747-SP, which is capable of nonstop flight from New York to Tokyo or New Delhi, seems to mark the end of the era of significant range restrictions on commercial aviation. 138. This arrangement borrows somewhat from the Australian proposal at Chicago. See note 53 supra and accompanying text 139. It might seem that it would be simpler to designate the second part of category I as category I1.However, the two parts should share both a common goal and a single election, as well as a small total number of seats compared to the remaining class. 140. Thus, geopolitical regions would be represented wholly within the remaining category. 141. See notes 104-12 supra and accompanying text. 1981 ICAO COUNCIL: REFORM tion presents a single face to the world in the form of a single primary international carrier. Thus, Denmark, Sweden, and Norway may be treated as a single nation because they maintain a common airline. The Central American group, however, should be elected individually as representatives of single states. If a group wishes to function on the Council with a single voice, the maintenance of an international airline should constitute evidence of that unity. Other nations should not be allowed to take advantage of the coalition tactic in order to outstrip their colleagues. If amended to incorporate these revisions, article 50(b) would read approximately like this:"' In electing the members of the Council, the Assembly shall give adequate representation to (1) the states of chief importance in [air transport) the furtherance and maintenance of aviation technology, and in the service of internationalcivil aviation; [(2) the States not otherwise included which make the largest contribution to the provision of facilities for international civil air navigation;) and (2) 1(3)] the States not otherwise included whose designation will reflect an even and fair distribution within Category II among [insure that] all the major regions [geographic areas] of the world [are represented on the Council]. Any vacancy on the Council shall be filled by the Assembly as soon as possible; and contracting State [sic] so elected to the Coun- cil shall hold office for the unexpired portion of its predecessor's term of office.

To reflect the terms and spirit of these changes, the Assembly must amend rule 56 of its rules of procedure to produce this version: a) The election of the Council shall be so conducted as to enable adequate representation on the Council to be given to the Contracting States described in Article 50(b) of the Convention and shall be held in two [three] parts as follows: i)The first part [election of States of chief importance in air transport] shall be held within four days of the opening of the session. The total number to be elected in this category shall be the nearest whole number to forty (40) per centum of the entire Council, to be divided equally among states as specified in Article 50(b)(1) and to be elected simultaneously but separately in the first election. If the total to be elected in this category is an odd number, the second sub- category shall be the larger. [ii)] [deleted] iii)[iii)] The second [third] part-election of States not elected in [either) the first [or the second] part, whether or not they were candidates in that [either of those] part~s], and whose designation will reflect an even and fair distribution within category II among [ensure that] all the major regions [geographic areas) of the world [are represented on the Council]-shall be held as soon as possible after the expiry of twenty-four hours following the publication of the list of

142. Existing words to be retained are shown in roman type, with new provisions in italics and deleted parts in brackets. DEN. J. INT'L L. & POL'Y VOL. 11:51

candidates mentioned in rule 59(b). 14 b)The number of States to be elected to the Council shall be the lesser of (1) the nearest whole number to twenty (20) per centum of the number of Contracting States in good standing or (2) thirty-five (35). As early as possible after the opening of the Session the Assem- bly (shall fix the maximum number of Contracting States to be elected in each part of the election) shall fix [also] the day on which the first [two] part[s] of the election shall be held. c)For purposes of this Rule, a State may run for election as a representative of a group of States only if that group shares a single international carrier responsible for at least two-thirds of. all international traffic carried by carriers based in that group." This plan maintains the three present levels of authority. These are the Convention (reflecting the will of the Contracting States), the Rules of Procedure (reflecting the will of the Assembly), and the electoral process itself (reflecting the will of individual voting states). The discretion of the latter is conceded in the phrase "even and fair distribution," permitting the vote to determine the precise geopolitical composition of the new category II. Contracting states should adopt and ratify these revisions to article 50(b) with relatively little trouble. The amendments are favorable to the smaller and less frequently represented states that by now make up the great majority of the Assembly. Category I states are also unlikely to suffer by the changes. Category II members like India, Lebanon, Egypt, and Spain are likely either to be promoted to first class or to be assured of a seat in third class. No easily identifiable class of states should find it necessary to oppose these revisions. The ICAO performs a vital function in establishing uniform safety standards and by providing a forum for the debate of aeronautical issues. It is essential that the composition of the Council reflect the swiftly changing world of international aviation. Simplification of the Council's election procedure and increased attention to the needs of less industrial states would represent a useful step in this direction. It is incumbent upon the contracting states of ICAO, now that other efforts have failed, to ratify the necessary amendments to article 50(b) of the Chicago Convention.

143. Rule 59(b) provides for the publication of a list of candidates for category III elections following the first two votes. Assembly Procedure, supra note 30, rule 59(b). 144. The two-thirds figure is relatively arbitrary. The determinant should be established at more than half to ensure a majority of traffic on one carrier, and yet not so high as to prevent other international operations. For example, Finnair's modest international traffic should not prevent a Scandinavian coalition centered on SAS. 1981 ICAO COUNCIL: REFORM

APPENDIX: ICAO COUNCIL MEMBERSHIP

Council PICAO I II I1 IV V VI VII VIII IX X XI XII Year of Election 1944 47 50 53 56 59 62 65 68 71 74 77 80

Algeria (NE Afr) 3 Argentina 2 1 x 2 2 2 2 2 2 2 2 2 Australia * 2 x x 1 1 1 1 1 2 1 1 1 Belgium I x x 2 2 2 2 2 (2,3) Brazil * Ix 1 1 1 1 1 1 1 1 . 1 Cameroon 3 Canada (host) * Ixx I 1 1 1 1 1 1 1 Chile * 3 (3) China * 2 (3) 2 2 2 Colombia * 3 3 3 3 3 3 Congo d d d d d 3 3 3 Costa Rica (CA) a 3 Czechoslovakia * 3 (2,3) 3(2) 3(2) 3 2 3 3 Denmark (Scand) 2 El Salvador (CA) 3 Egypt 2 x x 2 2 2 2 2 2 2 2 2 Finland (Scand) 2 France * 1 1 1 1 1 1 1 1 Greece Guatemala (CA) 3 3 Honduras (CA) 3 India * 2 x x 2 2 2 2 2 2 2 2 Indonesia d 3 3 3 3 3 Iraq * 3 x Ireland * 2 x x 3 Israel d (3) Italy x x 2 2 1 1 1 1 1 1 Jamaica d d d d d d 3 Japan 2 2 2 2 1 1 1 1 Kenya d d d d d d 3 3 Lebanon x 3 3 2 2 2 2 2 2 Madagascar d d d d d 3 3 3 3 Mexico * x x 2 2 2 2 2 2 2 Morocco (NE Afr) d d d d 3 3 Netherlands * 1li 1 1 1 2 2 (2) Nicaragua (CA) 3 3 Nigeria d d d d d 3 3 3 3 3 2 2 Norway (Scand) * x 1 2 Pakistan (3) (3) 2 2 (2)3 Peru * 3

Philippines x x (1) 3 3 3 (3) (3) Poland Portugal 2 x x 3 3 DEN. J. INT'L L. & POL'Y VOL. 11:51

IACO COUNCIL MEMBERSHIP (cont.)

Council PICAO I II III IV V VI VII VIII IX X Xi XII Year of Election 1944 47 50 53 56 59 62 65 68 71 74 77 80

Saudi Arabia (2,3) Senegral d d d 3 3 3 3 (2)3 South Africa I x Spain p x 2 2 2 2 2 2 Sweden (Scand) 3 1 2 Tanzania d d d d d 3 3 (3) Trinidad & Tobago d d d d d 3 Tunisa (NE Afr) d d d 3 3 3 3 Turkey 3 (2,3) (2) Uganda d d d d d d 3 U.S.S.R. 1 1 United Kingdom Sxx 1 1 1 1 1 United States 1 I 1 1 1 1 1 Venezuela xI 2 West Germany 2 1 1 1 1 1 1 Yugoslavia 3 3 Zaire d d d d d (3)1 TOTAL MEMBERS 21 21 21 21 21 21 27 27 27 27. 30 30 33 LEGEND Categories 1 Elected in Category I - states important to aviation 2 Elected in Category 11 - states important to air navigation 3 Elected in Category III - states to represent otherwise underrepresented areas d Dependency of Council member I State elected without designation of cateogry p State serving only part of term Unsuccessful candidate in category indicated (selected listings)

Regional Groups CA Central America: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama Scand Scandinavia: Denmark, Finland, Norway, Sweden NE Afr Northeast Africa (Mahgreb): Algeria, Mauritania, Morocco, Tunisia The Status of Foreign Sovereigns in Private Antitrust Actions

JOHN A. JOSTAD °

I. INTRODUCTION

No other country has embraced the capitalist free enterprise system as wholeheartedly as has the United States, and no country has so successfully applied the concept that competitive buying and selling are the most certain ways of ascertaining the true value of a product. Although the influence of government is unavoidable, the present political attitude is increasingly one of laissez-faire rather than one of governmental monitoring and control. The capitalist system contains imperfections. A recurring problem is the inability of the capitalist system to prevent the emergence of monopolistic or oligopolistic activity. Either of these developments undermines an essential element of the capitalist system which is the existence of a large number of sellers and a large number of buyers. To prevent the total undermining of the system, antitrust laws, described as "The Magna Carta of free enterprise"' and as "a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade,"'s have been enacted. Indeed, even the most fervent antigovern- ment economists recognize the need for antitrust law, and most businessmen in the United States understand the need for such laws as well. Neither American antitrust law nor the philosophy of competition it reflects has been fully accepted by other nations. In fact, much of the world disagrees with this philosophy. Tying agreements, exclusive dealing arrangements, price fixing, horizontal and vertical mergers, and cartels abound in the international business world. Many of the practices are violative of American antitrust law but are perfectly legal in other nations with less stringent antitrust laws. Indeed, such activities may be consistent with the basic economic philosophy of some foreign states. Any attempt by U.S. firms to employ any of these methods to offset the foreign practices may render the U.S. firm susceptible to an attack by the Justice Department or to suit in American courts by foreign sovereigns as private plaintiffs seeking treble damages and costs.

*John A. Jostad is a J.D. candidate at the University of Denver College of Law. B.S., 1977, Bemidji State University. 1. United States v. Topco Assocs., 405 U.S. 596, 610 (1972). 2. United States v. Northern Pac. Ry., 356 U.S. 1, 4 (1958). See also A.B.A. ANTrRUUI LAw DEVELOPMENTS 1 (1975). 3. 15 U.S.C. § 15 (1976). DEN. J. INT'L L. & POL'V VOL. 11:81

This Comment investigates one narrow aspect of the "extraterritorial" application of American antitrust laws. By its terms, the Sherman Act covers "[elvery contract, combination . . . or conspiracy, in restraint of trade or commerce . . with foreign nations."' Any discussion of the general development of the extraterritorial application of U.S. antitrust laws is beyond the scope of this Comment. The concern herein surrounds the status of a foreign nation under U.S. antitrust law. Although many of the substantive developments in extraterritorial antitrust law are relevant, i.e. antitrust defenses, those aspects have been severely limited in favor of procedural considerations. Among the questions addressed in this Comment are the following: What is the position of the courts respecting a sovereign's standing to sue as a private plaintiff?. Will a foreign sovereign be recognized as a named defendant? What are some of the international implications involved? And what legislative steps are being considered to address the problems that arise when a foreign state is involved in antitrust litigation? Finally, because of the confusion exhibited by the courts in their use of certain terms, a major focus of this Comment is upon the definitions of terms used in the antitrust laws, as well as the Foreign Sovereign Immunities Act of 1976 (FSIA),5 and related areas of law. The intention of this investigation is to provide a greater understanding of the problem and to clarify the issues.

4. The Sherman Act, ch. 647, § 1, 26 Stat. 209 (1890)(current version at 15 U.S.C. § 1 (1976)). Until United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945) (Alcoa), all reported U.S. antitrust cases included American corporations as defendants and the acts of restraint occurred in this country. However, in Alcoa, Judge Hand wrote: We should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States. On the other hand, it is settled law . . . that any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders ... which the state reprehends; and these liabilities other states will ordinarily recognize.

Both agreements would clearly have been unlawful, had they been made within the United States; and it follbws from what we have just said that both were unlawful, though made abroad, if they were intended to affect imports and did affect them. (Citations omitted.) Id. at 443-44. In this case, antitrust law was extended, as a matter of judicial policy, to encompass wholly foreign conduct if such conduct has effects within the United States. For examples of the pre-Alcoa attitude, see United States v. Sisal Sales Corp., 274 U.S. 268 (1927); Thomsen v. Cayser, 243 U.S. 66 (1917); United States v. Pacific & Arctic Ry.& Navigation Co., 228 U.S. 87 (1913); American Banana Co. v. United Fruit Co., 213 U.S. 347 (1909). See generally W. FUGATE, FOREIGN COMMERCE AND THE ANTrTRusT LAWS (2d ed. 1973). 5. 28 U.S.C. §§ 1330, 1602-1611 (1976). 1981 FOREIGN SOVEREIGNS IN ANTITRUST

II. UNITED STATES ANTITRUST LAW- A. The Statutes

A critical point of confusion in U.S. antitrust law surrounds the definition of a single word: "person." The Sherman and Clayton Acts both rely upon the identical definition of the word, stated as follows: "The word 'person' or 'persons' wherever used in this Act, shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, the laws of any State, or the laws of any foreign country." As used in U.S. antitrust law, no distinction is drawn between the use of the word "person" in a defendant context and "person" when used to describe a private plaintiff. Section 1 of the Sherman Act provides that: "Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . . . . .7Section 4 of the Clayton Act provides: Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor ... without respect to the amount in controversy, and shall recover three- fold the damages by him sustained, and the cost of the suit, including a reasonable attorney's fee.8 It appears that there is no distinction drawn in the use of the word "person" in either context. Viewing the single definition of the word, there would seem to be no reason to expect variation in its use. Indeed, that belief was echoed by the Supreme Court in United States v. Cooper Corp.:' "It is fair to assume that the term 'person,' in absence of an indication to the contrary, was employed by the Congress throughout the act in the same, and not in different senses."' 0 Subsequent cases have not reflected this initial interpretation. Since United States v. Cooper Corp., a decision in which the United States was held not to be a person within the meaning of the Sherman Act," the definition has become increasingly confused. Within the United States, the variation in interpretation is easily recognized in application of the antitrust laws to states. In Georgia v.Evans," Justice Frankfurter held that Georgia was a "person" entitled to sue for treble damages and

6. The Clayton Act, ch. 323, § 1, 38 Stat. 730 (1914)(current version at 15 U.S.C. § 12 (1976)). The definition in the Sherman Act is the same. See 15 U.S.C. § 7 (1976). 7. 15 U.S.C. § 1 (1976). 8. 15 U.S.C. § 15 (1976). 9. 312 U.S. 600 (1941). 10. Id. at 607. 11. United States v. Cooper Corp. involved an attempt by the United States to recover treble damages in an antitrust action. The Clayton Act was amended in 1955 to specifically allow the United States to "recover actual damages by it sustained and the cost of suit." 15 U.S.C. § 15(a)(1976). 12. 316 U.S. 159 (1942). DEN. J. INT'L L. & POL'Y VOL. 11:81 concluded: If the State is not a 'person'..., the Sherman Law leaves it without any redress for injuries resulting from practices outlawed by that Act. . . Nothing in the Act, its history, or its policy, could justify so restrictive a construction of the word 'person' in § 7 as to exclude a State. 8 Then, in Parker v. Brown,'4 the Supreme Court did not allow a suit to proceed against California's Director of Agriculture concerning the restraint upon the raisin industry of a raisin marketing program. A close reading of the case reveals that the Court did not hold that the state was not a "person,"' but based the decision upon concepts of immunity and sovereign action. However, the absence of a specific statement that the state was a person has led to a recognized definitional inconsistency. This equivocation has influenced extraterritorial application of U.S. antitrust laws. The variation in interpretation clearly surfaces in two leading cases involving foreign sovereigns. In Pfizer, Inc. v. Government of India (Pfi- zer)," India, the Imperial Government of Iran, and the Republic of the Philippines brought a private claim for treble damages against six phar- maceutical manufacturing companies.17 In deciding whether a foreign nation is entitled to sue in our courts for treble damages under the antitrust laws, the Court stated: [A) foreign nation otherwise entitled to sue in our courts" is entitled

13. Id. at 162. 14. 317 U.S. 341 (1943). 15. The Court stated in this regard: The Act is applicable to 'persons' including corporations. . . and it authorizes suita under it by persons and corporations ... .A state may maintain a suit for damages under it.. . but the United States may not.. . - [these are] conclusions derived not from the literal meaning of the words 'person' and 'corporation' but from the purpose, the subject matter, the context and the legislative history of the statute. (Citations omitted.) Id. at 351. See also Bates v. State Bar of Ariz., 433 U.S. 350 (1977); Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975). 16. 434 U.S. 308 (1978). 17. Similar actions were also brought by Spain, South Korea, West Germany, Colum- bia, Kuwait, and the Republic of Vietnam. 18. Beginning with its earliest decisions, the Supreme Court has recognized that foreign sovereigns are permitted to sue in U.S. courts subject to certain well-defined exceptions. See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964); Guaranty Trust Co. v. United States, 304 U.S. 126 (1938); The Sapphire, 78 U.S. (11 Wall.) 164 (1871); The Santissima Trinidad, 20 U.S. (7 Wheat.) 283 (1822). There are two major exceptions when foreign sovereigns cannot sue in U.S. courts: (1) when they are nations at war with the United States, e.g., First Nat'l City Bank v. Banco Nacional de Cuba, 406 U.S. 759 (1972), and (2) when they are not recognized by the executive branch. The latter exception was applied specifically when Vietnam's complaint against Pfizer, Inc., was dismissed in the case of Republic of Vietnam v. Pfizer, Inc.; 556 F.2d 892 (8th Cir. 1977). The court recognized that the Republic of Vietnam had "ceased to exist in law or in fact as a state and as a government" since the United States recognized no govern- 1981 FOREIGN SOVEREIGNS IN ANTITRUST

to sue for treble damages under the antitrust laws to the same extent as any other plaintiff. Neither the fact that the respondents are foreign nor the fact that they are sovereign is reason to deny them the remedy of treble damages Congress afforded to 'any person' victim- ized by violations of the antitrust laws."' A strong Burger dissent called for a congressional remedy to this situation. The Chief Justice pointed out that the use of the word "person" referred to both plaintiffs and defendants in antitrust statutes and that Congress did not specifically recognize foreign sovereigns within that definition.20 In InternationalAssociation of Machinists v. OPEC," a federal district court concluded that the "statutory language does not support the conclusion that foreign sovereigns are persons subject to Sherman Act liability."" The court distinguished the Pfizer holding as follows: The determining factor by the [Supreme] Court was that it did not 'require the Judiciary in any way to interfere in sensitive matters of foreign policy.': . . To include foreign nations within the ambit of 'persons' who may be sued as defendants, however, would require judicial interference in sensitive foreign policy matters ....3 Therefore, a foreign nation may sue, but not be sued, under the United States antitrust laws" and perforce, the Court is compelled ment in the territory formerly known as South Vietnam. Id. at 893. This decision focused upon what is loosely referred to as the principle of comity. The Supreme Court has defined comity as follows: This Court has called 'comity' in the legal sense 'neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other.'. . . Although comity is often associated with the existence of friendly relations between states .... the privilege of suit has been denied only to governments at war with the United States... or to those not recognized by this country .... This Court would hardly be competent to undertake assessments of varying degrees of friendliness or its absence, and, lacking some definite touchstone for determination, we are constrained to consider any relationship, short of war, with a recognized sovereign power as embracing the privilege of resorting to United States courts. (Citations omitted). Banco Nacional de Cuba v. Sabbatino, 376 U.S. at 409-10. 19. Pfizer, Inc. v. Government of India, 434 U.S. at 320. 20. Id. at 322. 21. 477 F. Supp. 553 (C.D. Cal. 1979). 22. Id. at 570. This action involved a claim by the plaintiff union against OPEC and the member nations for alleged price fixing of crude oil prices. Therefore section 1 of the Sher- man Act was allegedly violated. 23. In a footnote the court states: Giving a foreign sovereign the option to sue, merely allows the nation to use our judicial system if it wishes. Allowing foreign sovereigns to be sued, however, would require their presence in our courts. Thus the latter poses the greater threat to sensitive matters of foreign policy. Id. at 572 n.18. 24. In another footnote, the court states: "This determination is consistent with the Court's rulings concerning domestic States under the antitrust laws. States may sue, Geor- DEN. J. INT'L L. & POL'Y VOL. 11:81

here to dismiss the entire action against the defendants, members of OPEC because they cannot be made defendants herein in this anti-

trust suit .... *" (Citations omitted.) With this statement, the inconsistency was formally recognized. Since this is a lower court opinion, it could be maintained that this inconsistent interpretation is not established law. However, it seems to be an extension of the way in which states are treated under the antitrust laws. As will be recognized, this tenuous distinction in the interpretation of the word "person" was and is not required to keep the foreign sovereign from defending its actions in U.S. courts. Confusion of the issues has resulted in inconsistency, and apprehension of an unacceptable or unenforceable result has impeded logical assessment and basic statutory interpretation. B. Judicial Interpretations of the Antitrust Laws

The sovereign defendant has available a variety of defenses under U.S. antitrust law. There are also problems of standing and damages for all private plaintiffs, including foreign sovereigns. While a complete investigation in this regard is beyond the scope of this Comment, some of the actual antitrust problems other than inconsistent statutory interpretation should be examined. With the increasing prevalence in the international arena of state- controlled corporations, the importance of the act of state doctrine in potential antitrust actions has been enhanced. The concept may be defined as follows: "[A] court in the United States, having jurisdiction . . . will refrain from examining the validity of an act of a foreign state by which that state has exercised its jurisdiction to give effect to its public interests."' This is a statement of the more general policy recognized in Un- derhill v. Hernandez. 7 In that case Chief Justice Fuller stated: Every sovereign State is bound to respect the independence of every other sovereign State, and the courts of one country will not sit in judgment on the acts of the government done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves.'8 An example of the application of the act of state doctrine is found in Occidental Petroleum Corp. v. Buttes Gas & Oil Co."e In this case, a dis-

gia v. Euans ... but not be sued, Parker v. Brown ... under the antitrust laws. Id. at 572 n.19. 25. 477 F. Supp. at 572. 26. RESTATEMsNT (SECOND) FOIGN RzLATIONS LAw OF THE UNITED STATES § 41 (1965). 27. 168 U.S. 250 (1897). 28. Id. at 252. See also Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964); Hunt v. Mobil Oil Corp., 550 F.2d 68 (2d Cir. 1977). 29. 331 F. Supp. 92 (C.D. Cal. 1971), afl'd per curiam, 461 F.2d 1261 (9th Cir. 1972), cert. denied, 409 U.S. 950 (1972). 1981 FOREIGN SOVEREIGNS IN ANTITRUST

pute arose between two American oil companies which held offshore oil concessions granted respectively by two adjacent sheikdoms in the Trucial States in the Persian Gulf. Plaintiffs alleged that the defendants induced the ruler of one sheikdom, Sharjah, to claim ownership of the best part of the area of the plaintiffs' concession so that defendants could eventually obtain rights to drill in this area. Relying upon the act of state doctrine, the court stated: [T]o establish their claim as pleaded plaintiffs must prove, inter alia, that Sharjah issued a fraudulent territorial waters decree, and that Iran laid claim to the island of Abu Musa at the behest of the defendants. Plaintiffs say they stand ready to prove the former allegation by use of 'internal documents.' But such inquiries by this court into the authenticity and motivation of the acts of foreign sovereigns would be the very sources of diplomatic friction and complication that the act of state doctrine aims to avert."0 One can easily recognize the relevance of this statement to the role of a foreign sovereign as a named defendant, since in this case these states were recognized as unindicted co-conspirators. Any finding for the plaintiff would have severely challenged the activities of the sovereigns involved.81 Another closely related defense that is limited to a private defendant is the foreign compulsion principle. As presented by Justice Holmes in American Banana Co. v. United Fruit Co.,"' this rule would prevent antitrust liability for acts of private parties done pursuant to foreign law or at the direction of a foreign government. Although broader, the concept is closely related to the act of state doctrine, and the overlap was succinctly 8 recognized in Interamerican Refining Corp. v. Texas Maracaibo, Inc.: 3 "When a nation compels a trade practice, firms have no choice but to obey. Acts of business become effectively acts of the sovereign."8' The reach of these two concepts is still unclear despite much litigation. In the case of the foreign compulsion principle, a private party must show that the act was compelled and not merely condoned, allowed or

30. 331 F. Supp. at 110. 31. It is important to distinguish between the act of state doctrine and sovereign immunity, which will be discussed in greater detail below. An immunity defense bars consideration of the merits of the claim, including an examination of the act which gave rise to the claim. Therefore, if immunity is found, the defense that the act is not subject to examination by reason of the act of state doctrine will not be reached. The act of state defense applies when a person is acting on behalf of the foreign state and immunity applies to the foreign state itself. However, many of the definitional problems, as well as exceptions to the two provisions, are virtually identical in theory and scope. See RESTATEMENT (SEcOND) FOR- EIGN RELATIONS LAW OF THE UNITED STATES § 41, Comment e (1965); Banco Nacional de Cuba v. Sabbatino, 376 U.S. at 438. 32. 213 U.S. at 357-58. See W. Fugate, supra note 4, at 82. 33. 307 F. Supp. 1291 (D. Del. 1970). 34. Id. at 1298. See Vogelenzang, Foreign Sovereign Compulsion in American Anti- trust Law, 33 STAN. L. Rv. 131 (1980). DEN. J. INT'L L. & POL'Y VOL. 11:81 legal. Application of this concept becomes difficult if the private plaintiff has lobbied the foreign state into "compelling" the private actions.'5 Also, it seems that purely "commercial activity" is not protected by either the act of state doctrine or sovereign compulsion. 6 Although the role of commercial activities will be discussed in detail in relation to the FSIA, the act of state and foreign compulsion defenses possibly cannot be invoked if commercial activity of the sovereign is involved. Finally, it must be remembered that these defenses apply only to activity that has taken place within the foreign state and not to foreign activities within the United States itself. Any antitrust case, be it extraterritorial or not, may fail because of the application of recognized policies of antitrust law in the United States. The Supreme Court in Hanover Shoe, Inc. v. United Shoe Ma- chinery Corp.,3 rejected the "passing on" defense, a defense based on the presumption that a direct purchaser was not an injured party entitled to bring a private claim since the overcharges are passed on in the form of higher prices. Then, in Illinois Brick Co. v. Illinois,ss a price-fixing case, the Supreme Court held that a plaintiff may recover only if it purchased directly from the alleged price fixer. Realizing a risk of multiple liability for defendants if they could be sued by both direct and indirect purchasers, the Court stated: [Wie understand Hanover Shoe as resting on the judgment that the antitrust laws will be more effectively enforced by concentrating the full recovery for the overcharge in the direct purchasers rather than by allowing every plaintiff potentially affected by the overcharge to sue only for the amount it could show was absorbed by it." This limitation to direct purchasers should be an effective defense when

35. The dispute in this area revolves around application of the Noerr doctrine which is that "the Sherman Act does not prohibit two or more persons from associating together in an attempt to persuade the legislature or the executive to take particular action with respect to a law that would produce a restraint or a monopoly." Eastern R.R. President's Confer- ence v. Noerr Motor Freight, Inc., 365 U.S. 127, 136 (1961). See also Occidental Petroleum Corp. v. Buttes Gas & Oil Co., 331 F. Supp. 92 (1971). However, the Noerr doctrine was distinguished in Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962): "Respondents were engaged in private commercial activity, no element of which involved seeking to procure the passage or enforcement of laws." Id. at 707. See also Graziano, For- eign Governmental Compulsion as a Defense in United States Antitrust Law, 7 VA. J. INT'L L. 100, 132 (1967). 36. In Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 698-99 (1976), Justice White, joined only by three other justices in this plurality opinion, stated: Repudiation of a commercial debt cannot, consistent with this restrictive approach to sovereign immunity, be treated as an act of state; for if it were, foreign governments, by merely repudiating the debt before or after its adjudica- tion, would enjoy an immunity which our Government would not extend them under prevailing sovereign immunity principles in this country. 37. 392 U.S. 481 (1968). 38. 431 U.S. 720 (1977). 39. Id. at 734-35. 1981 FoREIGN SOVEREIGNS IN ANTITRUST foreign sovereigns are named defendants since the private plaintiff is often removed from any direct effects of the price-fixing actions by the foreign government.' 0 If the Illinois Brick doctrine does not eliminate the plaintiff's case, 1 the plaintiff must then show injury to business or property "by reason of" antitrust violations. Loosely recognized as a proximate cause requirement, the plaintiff must establish: (1) that a violation of the antitrust laws has in fact occurred; (2) that the illegal conduct was a substantial cause of the injury; and (3) that the injury is measurable in dollars. 2 Again, where governmental actions are involved, it may be difficult to prove that those actions were the cause of the injury.' I Finally, efforts by states to claim damages as parens patriae under section 4 of the Clayton Act, either on behalf of its individual citizen con- sumers" or for alleged injury to the state's economy as a whole,'5 have been uniformly unsuccessful. Whether this limitation applies to foreign sovereigns has yet to be determined. However, apart from the antitrust field, foreign sovereigns have generally been allowed to pursue claims 'on behalf of their citizenry, acting 7as the guardian of citizen interests abroad."6 Yet, the doubt remains.

40. See International Ass'n of Machinists v. OPEC, 477 F. Supp. at 561. This requirement that only "direct purchasers" have standing to sue has been challenged legislatively by Senator Kennedy. He introduced the Antitrust Enforcement Act of 1979, S. 300, 96th Cong., 1st Sess. (1979). This bill would have provided indirect purchasers the standing to sue for damages. However, at the present time the passage of this bill in any form seems remote. 'See Road Looks Rough for Illinois Brick Bill, 65 A.B.A.J. 1783 (1979). 41. Even if it cannot be shown that the plaintiff is the direct purchaser, the plaintiff may still maintain an action for injunctive relief. International Ass'n of Machinists v. OPEC, 477 F. Supp. at 561. 42. See A.B.A. ANTrrRUST LAW DEVELOPMENTS, supra note 2, at 258 and cases cited therein. 43. See InternationalAss'n of Machinists v. OPEC, 477 F. Supp. at 573. 44. In re Multidistrict Vehicle Air Pollution, 481 F.2d 122 (9th Cir. 1973), cert. denied, 414 U.S. 1045 (1973), rehearing denied, 414 U.S. 1148 (1974); California v. Frito-Lay, Inc., 474 F.2d 774 (9th Cir. 1973), cert. denied, 412 U.S. 908 (1973); Philadelphia Hous. Auth. v. American Radiator & Standard Sanitary Corp., 309 F. Supp. 1057 (D. Pa. 1969). 45. Hawaii v. Standard Oil Co., 405 U.S. 251 (1972). These actions can be distinguished from those discussed earlier in which the state has sought to recover damages for injuries resulting to it from violations of the antitrust laws. For instance, in Georgia v. Evans, 316 U.S. 159 (1942), Georgia sued on specific contracts for damages due to a price-fixing scheme. No general damage to the state's economy was alleged. 46. For an excellent and definitive discussion of this problem of parens patriaeactions by a foreign sovereign in an antitrust action, see Velvel, Antitrust Suits by Foreign Nations, 25 CATH. U.L. REv. 1, 27-33 (1975). Professor Velvel has consistently argued that a foreign nation should be permitted to sue as the official representative of its citizens in antitrust causes of action. For a general discussion of parens patriae actions, see Avery, Authority of State to Sue as Parens Patriaeto Recover Treble Damages Under § 4 of Clayton Act, Annot., 23 A.L.R. Fed. 878 (1975). 47. See Pfizer, Inc. v. Lord, 522 F.2d 612, 618 (8th Cir. 1975) in which the court states: "Principles of comity, international law and existing United States treaties do not afford foreign sovereigns the right to press their citizens' claims in a manner barred to domestic DEN. J. INT'L L. & POL'O VOL. 11:81

The following conclusions can be made about the status of foreign sovereigns under U.S. antitrust law. First, a foreign sovereign is a "person" as a plaintiff but is not a "person" when named as a defendant. Second, the act of state doctrine and the foreign sovereign compulsion principle have been recognized as effective defenses in U.S. antitrust law. Third, in all antitrust actions, the direct purchaser must bring the private action, and the alleged conduct must be the cause of the injury. Finally, although states generally may not maintain parens patriae actions against defendants in an antitrust action, the question whether foreign sovereigns may bring such suits remains unclear.

III. INTERACTION OF THE ANTITRUST LAWS WITH THE FOREIGN SOVEREIGN IMMUNITIES ACT oF 1976 (FSIA) A. Introduction

Prior to the enactment of the FSIA a great deal of confusion sur- rounded the U.S. position on sovereign immunity. The Supreme Court initially adopted the absolute theory of sovereign immunity in The Schooner Exchange v. M'Faddon."s Under the absolute theory of sovereign immunity, a foreign state may not be sued in the courts of another nation under any circumstances. In the famous Tate Letter"S issued on May 19, 1952, the restrictive theory of sovereign immunity was endorsed by the Department of State. Under the restrictive theory, foreign sovereigns are not immune from suit for their private or commercial activities. The FSIA codified this restrictive theory of immunity.80 Sovereign immunity is granted by the FSIA in suits involving a foreign state's public acts (acta jure imperii), but does not extend to suits based upon its commercial or private acts (acta jure gestionis).51 states vis-a-vis their citizens." However, these cases are distinguishable from a class action brought by a state attorney general under rule 23 of the Federal Rules of Civil Procedure. In class action cases the state does not recover the damages; in a parens patriae action, the state does recover damages. 48. 11 U.S. (7 Cranch) 116, 137 (1812). In the opinion, Chief Justice Marshall said: One sovereign being in no respect amenable to another; and being bound by obligations of the highest character not to degrade the dignity of his nation, by placing himself or its sovereign rights within the jurisdiction of another, can be supposed to enter a foreign territory only under an express license, or in the confidence that the immunities belonging to his independent sovereign station, though not expressly stipulated, are reserved by implication, and will be extended to him. 49. Letter from Jack B. Tate, Acting Legal Adviser of the Department of State, to Philip B. Perlman, Acting Attorney General (May 19, 1952), reprintedin 26 DEP'T ST. BULL. 984 (1952). 50. H.R. REP. No. 1487, 94th Cong., 2d Seas. 7-8 (1976), reprinted in 1976 U.S. CODE CONG. & AD. NEws 6604, 6606 [hereinafter cited as Housz REPORT]. 51. The appropriate sections of the FSIA are quoted below. Immunity of a foreign state from jurisdiction is covered in section 1604: Subject to existing international agreements to which the United States is 1981 FOREIGN SOVEREIGNS IN ANTITRUST

The FSIA requires that the restrictive theory of sovereign immunity be, interpreted and applied by the U.S. courts and not by the State De- partment, thereby providing a consistent procedure for suit against a foreign sovereign.52 The FSIA provides a statutory procedure for making service upon, and obtaining in personam jurisdiction over a foreign state."' No longer is the practice of seizing and attaching the property of a foreign government required for the purpose of obtaining jurisdiction.8' Fi- nally, there is an attempt to remedy the enforcement problems facing a plaintiff who has obtained a judgment against a foreign state.65 To fully

a party at the time of enactment of this Act a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in.sections 1605 to 1607 of this chapter. 28 U.S.C. § 1604 (1976). Exceptions to the jurisdictional immunity of a foreign state are provided in section 1605: (a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case- (1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver; (2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States. 28 U.S.C. § 1605 (1976). Counterclaims are dealt with in section 1607: In any action brought by a foreign state, or in which a foreign state inter- venes, in a court of the United States or of a State, the foreign state shall not be accorded immunity with respect to any counterclaim - (a) for which a foreign state would not be entitled to immunity under section 1605 of this chapter had such claim been brought in a separate action against the foreign state; or (b) arising out of the transaction or occurrence that is the subject matter of the claim of the foreign state; or (c) to the extent that the counterclaim does not seek relief exceeding in amount or differing in kind from that sought by the foreign state. 28 U.S.C. § 1607 (1976). 52. The declaration of purpose section of the FSIA states: The Congress finds that the determination by the United States courts of the claims of foreign states to immunity from the jurisdiction of such courts .would serve the interests of justice and should protect the rights of both foreign states and litigants in the United States courts .... Claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter. 28 U.S.C. § 1602 (1976). 53. 28 U.S.C. § 1609 (1976). See also House REzPORT, supra note 50, at 8. 54. Section 1609 states: "Subject to existing international agreements to which the United States is a party at the time of enactment of this Act the property in the United States of a foreign state shall be immune from attachment, arrest and execution except as provided . .. [by] . . . this chapter." 28 U.S.C. § 1609 (1976). 55. This problem is addressed in 28 U.S.C. § 1610 (1976): "The property in the United DEN. J. INT'L L. & POL'Y VOL. 11:81 understand these provisions and their implications for antitrust law, a close examination of the statute itself is necessary.'6 B. The Statutory Provisions of the FSIA The meaning of three basic phrases in the FSIA are important in evaluating the impact of the FSIA on U.S. antitrust law. The phrases are: (1) "foreign state," (2) "commercial activity," and (3) "waiver of immunity." The FSIA's definition of each phrase will be presented, followed by a look at various court interpretations of the phrases. The FSIA defines "foreign state" as follows:

A 'foreign state' . . . includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state .... An agency or instrumentality of a foreign state means any entity-(1) which is a separate legal person, corporate or otherwise, and (2) which is an organ of a foreign state . . . or . . . is owned by a foreign state. . . and (3) which is neither a citizen of. . .the United States ...nor created under the laws of any third country.57 Any entity which does not fall within these definitions would not be entitled to sovereign immunity.8 This definition of "foreign state" has been broadly construed. in Ca- rey v. National Oil Corp.," a corporation wholly owned by the Libyan government was a defendant in a contract case. After recognizing the corporation as an agent of Libya, the court dismissed the case finding possible exceptions to immunity inapplicable." However, in Edlow Interna-

States of a foreign state ... used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State ...." (Emphasis added.) 56. At this point the provisions of the FSIA will be addressed to the concerns of this Comment as much as possible. For additional discussion surrounding the development of sovereign immunity and the impacts of the 1976 Act, see T.R. GnuTrrAni, THE AmzRICAN LAW OF SOVEREIGN IMMUNITY (1970); Cardozo, Sovereign Immunity: The Plaintiff Deserves a Day in Court, 67 HARV. L. REv. 608 (1954); von Mehren, The Foreign Sovereign Immunities Act of 1976, 17 COLUM. J. TRANSNAT'L L. 33 (1978); Weber, The Foreign Sovereign Immuni- ties Act of 1976: Its Origin, Meaning and Effect, 3 YALE STUD. WORLD PUB. ORD. 1 (1976); Editorial Comment, New United States Policy Limiting Sovereign Immunity, 47 Am. J. INT'L L. 93 (1953). For a general background, see L. DELUPiS, INTERNATIONAL LAW AND THE INDEPENDENT STATE (1974); L. JAFE, JUDICIAL ASPECTS OF FOREIGN RELATIONS 51 (1933); R. PURNELL, THE SOCIETY OF STATES: AN INTRODUCTION TO INTERNATIONAL POLMcs (1973). 57. 28 U.S.C. § 1603 (1976). 58. On the other hand, the fact that an entity is included in this definition does not establish an entitlement to sovereign immunity. A court would have to consider whether one of the specific exceptions to immunity might be applicable and immunity might be denied. See HousE REPORT, supra note 50, at 15. 59. 592 F.2d 673 (2d Cir. 1979). 60. For similar definitions of agency or instrumentality, see Behring Int'l, Inc. v. Impe- rial Iranian Air Force, 475 F. Supp. 396 (D. N.J. 1979); Jet Line Service, Inc. v. m/v Marsa El Harigan, 462 F. Supp. 1165 (D. Md. 1978); Outboard Marine Corp. v. Pezetel, 461 F. Supp. 384 (D. Del. 1978); Yessenin-Volpin v. Novosti Press Agency, 443 F. Supp. 849 (S.D.N.Y. 1978). 1981 FOREIGN SOVEREIGNS IN ANTITRUST tional Co. v. Nuklearna Electrarma Krsko,61 the District Court of the District of Columbia held that a Yugoslavian nuclear power plant operated by a workers organization was not an "agency or instrumentality of the state." The court explained: The Act's legislative history evinces Congress' intent that the definition of 'agency or instrumentality of a foreign state' be read broadly to encompass a variety of forms . . . However, there is no suggestion that a foreign state's system of property ownership, without more, should be determinative on the question whether an entity operating within the state is a state agency or instrumentality under the Act." Thus, what instrumentalities will be found to be "foreign states"' is unclear. If the defendant is not a foreign state or an agency of the state, it receives no immunity protection, but if the defendant is a foreign state or an agency of the state, sovereign immunity is granted subject to the exceptions outlined below. Potentially the most problematic area of the FSIA lies in its definition of a 'commercial activity.' The FSIA's definition is as follows: A 'commercial activity' means either a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose."

The restrictive theory of sovereign immunity rests upon this definition and the interpretation it has received by the courts.

61. 441 F. Supp. 827 (D.D.C. 1977). 62. Id. at 831-32. 63. Compare the class of defendants that may invoke the foreign sovereign immunity defense as compared to those who may invoke the act of state doctrine or the foreign compulsion principle in antitrust law. Clearly under the latter principle, a broader class of defendants may invoke the compulsion defense since any private defendant may prove that the violative acts were compelled by a foreign sovereign. The act of state doctrine seems to rely upon very similar definitions of foreign state. and agency as does the FSIA. However, the act of state doctrine operates only to preclude issues from consideration, whereas sovereign immunity recognition renders the entire claim nonjusticiable. See National Am. Corp. v. Federal Republic of Nigeria, 448 F. Supp. 622 (S.D.N.Y.), afl'd, 597 F.2d 314 (1978). See also DeKieffer, The Foreign Sovereign Immunities Act and Antitrust: A Hollow Promise, 7 SmncusS J. ITrr'L L. & Com. 37 (1979). 64. 28 U.S.C. § 1603(d) (1976). Subsection (e) states: "A 'commercial activity carried on in the United States by a foreign state' means commercial activity carried on by such state and having substantial contact with the United States." 28 U.S.C. § 1603(e) (1976). This "substantial contact" test will not be emphasized further in this Comment. In any antitrust case, the requirements of the Sherman and Clayton Acts force any potential plaintiff to comply with a somewhat stricter test than the one required by subsection (e). Therefore, in order to meet the requirements of a prima facie case, this aspect of the FSIA will not be an obstacle. If the acts in question are wholly outside U.S. commerce and have no direct effects in the United States, no antitrust case can be maintained. See East Europe Domestic Int'l Sales Corp. v. Terra, 467 F. Supp. 383 (S.D.N.Y. 1979). DEN. J. INT'L L. & POL'Y VOL. 11:81

In Outboard Marine Corp. v. Pezetel," an American manufacturer of electric golf. carts brought an antitrust action against a Polish manufacturer of identical carts, its wholly owned importer, and the distributors. The defendants filed motions to dismiss, arguing, inter alia, that its actions were of a governmental nature and any inquiry into the motives of the government would result in embarrassment and insult. The court replied: (T]he FSIA explicitly instructs that the test in determining whether the activity is commercial is the nature of that activity and not its purpose. A review of the activity alleged in the complaint, i.e., involvement in the manufacture and sale of golf carts, admits of only one conclusion-that defendant Pezetel is engaged in commercial activity and as such is not immune from suit under the FSIA." On the other hand, after a rather complete discussion of "commercial activity," the opposite result was reached in InternationalAssociation of Machinists v. OPEC.67 The court stated: If the activity is one which normally could be engaged in by a private party, it is a commercial activity and the foreign state is not entitled to immunity .... If the activity is one in which only a sovereign can engage, the activity is noncommercial ... This Court agrees that this 'commercial activity' should be defined narrowly.. . . From the evidence presented to this Court, it is clear that the nature of the activity engaged in by each of these OPEC member countries is the establishment by a sovereign state of the terms and conditions for the removal of a prime natural resource-to wit, crude oil-from its territory.68 The decision whether the "commercial activity" definition is to be narrowly or broadly construed is, as yet, unsettled. A broad construction of the term by the courts would limit the application of sovereign immunity while a narrow construction of the term probably would lead to increased claims of sovereign immunity.6' Clearly, the role of the courts is critical. The definition of "waiver of immunity" may also affect antitrust litigation. As a general rule, a waiver of immunity results in no protection under the FSIA. A prime example of the operation of such a waiver is

65. 461 F. Supp. 384 (D. Del. 1978). 66. Id. at 395-96. See also United Euram Corp. v. U.S.S.R., 461 F. Supp. 609. (S.D.N.Y. 1978), which held that a contract made with the Soviet Ministry of Culture pursuant to a cultural exchange agreement with the United States was commercial; and Yessenin-Volpin v. Novosti Press Agency, 443 F. Supp. 849 (S.D.N.Y. 1978), which held that a libel suit could not be brought against Tass because it was an agency of the Soviet government. 67. 477 F. Supp. 553 (C.D. Cal. 1979). 68. Id. at 566-67. 69. The difficulty in defining the scope of "commercial activity" is also a problem in applying the act of state doctrine. See Alfred Dunhill of London, Inc. v. Cuba, 425 U.S. 682 (1976). 1981 FOREIGN SOVEREIGNS IN ANTITRUST found in Behring Internationalv. Imperial Iranian Air Force.70 Although not an antitrust action, the waiver concept was determinative. The Treaty of Amity between the United States and Iran was cited as follows: No enterprise of either High Contracting Party including corporations, associations, and government agencies and instrumentalities, which is publicly owned or controlled shall, if it engages in commercial, industrial, shipping or other business activities within the territories of the other High Contracting Party, claim or enjoy, either for itself or for its property, immunity therein from taxation, suit, execution of judgment or other liability to which privately owned and controlled enterprises are subject therein." (Emphasis added.) The Court concluded that the waiver of immunity, inter alia, prevented the Imperial Iranian Air Force from claiming immunity from the jurisdiction of U.S. courts. The concept of waiver must be remembered in antitrust law as well. Since an effective claim of immunity bars any further action by the court, the possibility that such immunity has been waived would be a crucial determination. C. The Interaction-Between the FSIA and Antitrust Law

It should be clear from the above that there is an interrelationship between antitrust law and the concept of foreign sovereign immunity. When a court is presented with an antitrust claim involving a foreign sovereign as a defendant, dismissal of the case may be based upon many factors. The court may, potentially, lack jurisdiction through the operation of the PSIA. Sovereign immunity is an affirmative defense which must be specifically pleaded, and the burden of its proof is on the foreign state.72 Assessment of whether the defendant is a "foreign state" or an "agency or instrumentality of a foreign state," along with the critical determination of whether the alleged violative act is a "commercial activity," must be made by the court. Finally, the court must investigate whether a waiver has occurred. Only after these determinations are made may the court deal with the procedural problems of antitrust law. Aside from the basic definition of a "person" which may be a complete defense for a foreign sovereign as a defendant,7' numerous other factors must be considered. The court may

70. 475 F. Supp. 383 (D.N.J. 1979). 71. Treaty of Amity, Economic Relations, and Consular Rights, Aug. 15, 1955, United States-Iran, 8 U.S.T. 899, art. XI, pare. 4, T.I.A.S. No. 3853. 72. House REPORT, supra note 50, at 17. For further discussion of the FSIA, see Friend, Suing a Foreign Government Under the United States Antitrust Laws: The Need for Clar- ification of the Commercial Activity Exception to the Foreign Sovereign Immunities Act of 1976, 1 Nw. J. Ibr'L L. & Bus. 657 (1979). 73. An interesting question is whether a counterclaim made against a foreign sovereign in an antitrust action would fail. Although immunity is generally waived by a sovereign plaintiff, an antitrust counterclaim would fail if the sovereign plaintiff was not recognized as DEN. J. INT'L L. & POL'O VOL. 11:81 choose not to pursue a cause of action because of the act of state doctrine, since to do so would involve a judgment concerning acts of a government within that government's own borders, or because the named defendant's acts were compelled by a foreign sovereign. Also, the court must address the plaintiff's cause of action to determine if the plaintiff was the direct purchaser and if there was a substantial causal connection between the alleged harm and any actions of the defendants. In the case of a sovereign plaintiff, the harm must be to the sovereign itself and cannot appear to be an action in parens patriae. Although these procedures seem relatively basic, courts are often un- willing to realize the distinctions and the interactions between sovereign immunity and antitrust law. At most the courts only implicitly recognize the above-mentioned distinctions. Clearly, numerous obstacles exist to the maintenance of a successful antitrust action against a foreign sovereign. On the other hand, there are no corresponding procedural obstacles if a foreign sovereign brings a suit as a private plaintiff. It is possible that a foreign state could take full advantage of U.S. antitrust remedies such as treble damages, attorney's fees, and costs, and yet remain totally invul- nerable to any related counterclaim because it is not recognized as a "person" under antitrust law. This favorable position enjoyed by foreign sovereigns has resulted in congressional concern, and legislative changes intended to allow more consistent application of the antitrust laws have been proposed.7' The remainder of this Comment will focus upon the proposed legislation and the reasons behind these proposals.

IV. LEGISLATIVE RESPONSES A. Introduction The proposed legislation focuses upon the foreign sovereign as a private plaintiff rather than as a defendant. Presently it is improbable, if not impossible, to maintain an antitrust action against a foreign sovereign or an agency thereof.75 Also, any legislative solution is limited by interna- a "person" against whom a counterclaim could be filed since the sovereign's position would be analogous to a defendant for purposes of the counterclaim. 74. Perhaps the legislators, as well as this author, are guilty of the attempt to make all court opinions fit into one picture. As Judge Wyzanski warned: "[I]n connection with the Sherman Act, it is delusive to treat opinions written by different judges at different times as pieces of a jigsaw puzzle which can be, by effort, fitted correctly into a single pattern." United States v. United Shoe Mach. Corp., 110 F. Supp. 295, 342 (D. Mass. 1953), aff'd per curiam, 347 U.S. 521 (1954). However, statutory law is based upon a concept of notice. It can be argued easily that if court interpretation has grown too muddled or is contrary to the intentions of Congress when a particular statute was passed, there should be some congressional action to clarify, distinguish, or overrule such judicial interpretation. 75. Since a foreign state has been held not to be a person under the antitrust laws when it is a defendant, it may be impossible to maintain such an action. Besides this factor, the other considerations discussed above, such as sovereign immunity, make the likelihood of a successful suit very remote. 1981 FOREIGN SOVEREIGNS IN ANTITRUST tional reality. The existence of cartels is an international fact, and it is that any national attempt to force foreign sovereigns to highly doubtful 7 comply with U.S. antitrust laws could succeed. On the other hand, congressional action could be effective against a foreign state plaintiff since they voluntarily enter our courts. Thus, given international political realities and the inequities of the current status of the foreign sovereign under U.S. antitrust law, the potential for an effective legislative proposal is limited to regulating the potential foreign plaintiff.

B. The Major Concerns

Among the issues any legislative proposal should address are those of international boycotts and the defense of in pari delicto. The growing involvement of foreign governments in transnational commerce, together with their established rights to sue under section 4 of the Clayton Act, pose a number of novel issues where the alleged boycott is related to actual or threatened coercion by a potential plaintiff government. For example, consider an extension of the fact situation present in Long Island Lighting v. Standard Oil Co. of California.1" In that case, various public utilities brought antitrust actions against three integrated petroleum companies alleging that these companies engaged in group boycott activity and attempts to monopolize. In dismissing the boycott claim, the Second Circuit Court of Appeals affirmed the lower court's holding that the utilities were not in the "target area" and, therefore, lacked standing. The group boycott was aimed primarily at Libya and secondarily at Saudi Arabia. Assume for the moment that this case had

76. Even U.S. allies, when they become specially involved, question many Justice De- partment antitrust enforcement activities. However, a few of them, West Germany for example, have agreed to aid in antitrust investigations and proceedings, including discovery and judgment enforcement. See Agreement Relating to Mutual Cooperation Regarding Re- strictive Business Practices, June 23, 1976, United States-Fed. Republic of Germany, 27 U.S.T. 1956, T.I.A.S. No. 8291, which specifically provides for cooperation between the two countries in antitrust enforcement proceedings. However, many allies have become determined to limit U.S. interference in their economies and feel that American courts have attempted to reach out too far under the antitrust laws. The French have recently passed a bill, commonly referred to as a "blocking statute," that makes it a crime for persons to hand over business records subpoenaed in foreign antitrust proceedings. [July-Dec.) ATrMRUsT AND TRAE REo. Rzip. (BNA) No. 993, at A-7 (Dec. 11, 1980). Retaliatory blocking statutes to prevent legal discovery in antitrust proceedings have been adopted or are being considered by a number of foreign governments. Other alternatives being used include: nonenforceability statutes which make a foreign firm, in effect, judgment-proof; and "clawback" laws, which allow the foreign state to recover part or all of the treble damages awarded under U.S. laws. Besides France, countries having or developing such laws include Great Britain, Canada, Australia and .New Zealand. Id. See also British Nylon Spinners, Ltd. v. Imperial Chem. Indus., Ltd., [1952) 2 All E.R. 780, 784 (C.A.). 77. 521 F.2d 1269 (2d Cir. 1975). DEN. J. INT'L L. & POL'Y VOL. 11:81 occurred after Pfizer,78 and Libya and Saudi Arabia had attacked this boycott in American courts seeking treble damages and costs. Theoreti- cally, they would be treated the same as any private plaintiff and a prima facie case, including the effect on U.S. commerce, could easily be stated. Even if the boycott was in response to the formation of a cartel between Libya and Saudia Arabia, it is likely that the in pari delicto defense would fail. In Perma Life Mufflers, Inc. v. International Parts Corp.,79 this defense was apparently abolished. The court in Perma Life stated: "The plaintiff who reaps the reward of treble damages may be no less morally reprehensible than the defendant, but the law encourages his suit to further the overriding public policy in favor of competition."" Thus, while the in pari delicto defense seems to be the only existing protection against the inequitable use of the court system, serious doubts exist as to whether any form of the defense has survived.81 Another concern is that the foreign state is receiving better treatment in the American courts than the United States itself. As stated above, the United States can only recover actual damages as a plaintiff in an antitrust action along with the cost of the suit."2 As the law now stands, a foreign government may seek treble damages and attorney's fees, in addition to court costs. Furthermore, since foreign nations tend to "tag along" on major Justice Department antitrust cases rather than institute the initial suit themselves, single damages should be a sufficient incentive to prosecute the claim. 8 When combined together, the inequalities are of greater concern. The highly developed nature and relative ease of access to U.S. courts dilutes whatever incentive may exist for foreign

78. Pfizer, Inc. v. Government of India, 434 U.S. 308 (1978). 79. 392 U.S. 134 (1968). 80. Id. at 139. 81. See Calnetics Corp. v. Volkswagen of Am., Inc., 532 F.2d 674, 688-89 (9th Cir. 1976). Consider the statement made by Houser & Rigler in Antitrust and the Foreign Gov- ernment Trader: The Impact of Pfizer, Inc. v. Gov't of India, 10 LAW & PoL'y INT'L Bus. 719, 758-59 (1978): If there is at least a wheezy breath remaining in some form of in pari delicto in a domestic context, there should be a species of it applicable to cases arising out of foreign government coercive practices .... [Tihe defendant should have to show that its conduct arose out of and was intended to mitigate the effect of actual or imminently threatened conduct by the plaintiff that would expose the defendant to serious economic harm, and that the defendant had exhausted all other reasonable avenues of relief from the impact of the foreign government's action. Such a formulation of the in pari delicto defense recognizes that no public goal is advanced by permitting recovery when the defendant's allegedly illegal act was precipitated by the plaintiffs application of coercive economic power. Judicial recognition of this view of the in pari dilecto defense has yet to occur. An alternative would be to require that the foreign sovereign plaintiff pursue the claim in its own courts under their own antitrust provisions. 82. 15 U.S.C. § 15a (1976). See also note 11 supra. 83. See Gaertner, Foreign Nation Suits for Treble Damages Under the Clayton Act After Pfizer v. Government of India, 13 U. MicH. J.L. REP. 405, 421 (1980). 1981 FOREIGN SOVEREIGNS IN ANTITRUST

nations to develop further their own antitrust laws. Frequently, foreign nations are unable to pursue their antitrust claims in their own court systems. The above represents some of the concerns voiced by various members of Congress when drafting the new proposals. The proposed legislation focuses on three alternative solutions: (1) limiting the foreign state to single damages, (2) requiring general reciprocity, and (3) pursuing a more complete overall investigation in the hopes of achieving a more complete solution. Limiting the foreign state to single damages would put it on equal footing with the United States. General reciprocity would require foreign nations to prohibit behavior violative of U.S. antitrust law if they wish to sue because of such behavior in American courts, thus providing additional international antitrust development and allowing the United States to more effectively pursue claims against foreign firms.'" Finally, an investigatory commission would be able to examine the concerns of the courts, the agencies involved, the foreign nations, and the commentators to achieve an overall consistent solution. Historically, Congress has not been concerned with international antitrust. Since the enactment of the Webb-Pomerene Act, 5 Congress has not passed any antitrust legislation intended to solve international problems. However, the inconsistency and confusion in judicial enforcement of the antitrust laws in an international context have resulted in a new wave of legislative proposals. C. Actual Legislative Proposals Senator Strom Thurmond introduced a bill to amend section 4 of the Clayton Act to expressly exclude a foreign sovereign from the meaning of the word "person." 6 The foreign sovereign is not left without redress, however, since it may sue and single damages are to be allowed. 1 Senator Thurmond stated: "It appears to me that it is only fair and that common sense will lead us to treat a foreign nation no better or no worse than we treat our own country in U.S. courts.""a Senator Daniel Inouye proposed a bill to allow treble damage recov-

84. Id. at 422-29. 85. 15 U.S.C. §§ 61-65 (1976). The Webb-Pomerene Act allows some avoidance of the antitrust laws. When an association is formed for the sole purpose of engaging in export trade, then any agreement made or act done by the association is deemed not to be a restraint of trade, provided the act done or agreement made has no effect on prices in the United States. 15 U.S.C. § 62 (1976). For excellent discussions of the Act, see Baker, Anti- trust and World Trade: Tempest in an International Teapot?, 8 CORNELL INT'L L.J. 1 (1974); McDermid, The Antitrust Commission and the Webb-Pomerene Act: A Critical As- sessment, 37 WASH. & LEE L. REv. 105 (1980); Rahi, American Antitrust and Foreign Oper- ations: What is Covered?, 8 CORNULL INT'L L.J. 1 (1974). 86. S.2395, 95th Cong., 2d Sess. (1978). 87. This bill would allow for treatment identical to that received by the United States itself. See Georgia v. Evans, 316 U.S. at 162. 88. 124 CONG. REc. S 36, 36 (daily ed. Jan. 19, 1978). DEN. J. INT'L L. & POL'Y VOL. 11:81 ery if there was strict reciprocity between the United States and the foreign nation desiring to use the American courts. His bill would amend section 4 of the Clayton Act by adding: "A foreign government, including any agency or agent thereof, may sue for any injury pursuant to this section if United States persons and the United States government are permitted equivalent access and relief for the same injury in the courts of such foreign sovereign government."' 9 Congressman Charles Wiggins introduced the most drastic proposal. His proposal would exclude foreign sovereigns from the protection of American antitrust law altogether.90 None of these proposals is entirely effective in achieving the desired end. It is relatively easy to rewrite the Clayton Act to provide for single damages rather than treble damages, but while the Thurmond proposal places the foreign sovereign on equal footing with the United States, it does not address the concerns about the formation of cartels nor does it recognize that antitrust law is saddling U.S. firms with an additional nontariff barrier. On the other hand, the Inouye bill, which attempts to deal with these concerns by requiring complete reciprocity, would effectively eliminate the development of foreign antitrust law. Furthermore, no foreign court system could reflect the development of U.S. antitrust law in a short period of time. To date, the most acceptable proposal has been offered by Senator Dennis DeConcini..His proposal incorporates an actual damages requirement together with a reciprocity requirement. His proposed amendment to section 4 of the Clayton Act would require that before a foreign sovereign may maintain an action in a U.S. court, the Attorney General must certify to the relevant court that the United States is entitled to sue in its own name and on its own behalf in the courts of the foreign sovereign, and that the foreign sovereign has laws that prohibit restrictive trade practices. 1 This amendment establishes both single damages and the mechanics for the development of antitrust reciprocity. However, the requirement of a determination by the Attorney General as to the reciprocity issue not only places an additional burden upon the Attorney General's office but also places the reciprocity determination in a potentially political atmosphere. Such a determination by the executive branch would inevitably involve political considerations apart from the actual congressional intention to make .the application of antitrust laws to foreign sovereigns more equitable. There has been one additional legislative attempt that, in the long run, may avoid many of the problems found in the previous proposals.

89. S. 2724, 95th Cong., 2d Seas. (1978), reprinted in Gaertner, supra note 83, at 431. 90. H.R. 11942, 95th Cong., 2d Sess. (1978). 91. S. 2486, 95th Cong., 2d Seas. (1978). See Gaertner, supra note 83, at 430. This was the only proposal to be reintroduced in the 96th and the 97th Congresses. At the time of this writing, S. 816, the version of the bill introduced into the 97th Congress, had already been reported out of subcommittee with approval. S. 816, 97th Cong., 1st Seas. (1981). 1981 FOREIGN SOVEREIGNS IN ANTITRUST

The bill, S. 1010, proposed to establish a Commission on the Interna- tional Application of the United States Antitrust Laws." The Senate passed the bill but no corresponding House bill was approved. Basically, the bill established a commission that would examine the impact of the antitrust laws on the ability of U.S. firms to compete effectively in overseas markets, along with an examination of how these laws interrelate with those of other nations. Specifically, section two of the proposal provided that the study shall specifically address the proper scope and effect of the following on the application of U.S' antitrust laws: The rules governing sovereign immunity, the act of state doctrine, the defense of foreign sovereign compulsion, and the doctrine of comity."s Most importantly, the Commission would assemble the ideas of the important commentators and government agencies involved in international antitrust problems. Then, the recommended changes in U.S. antitrust law would be presented to the President and to Congress. Conceiva- bly, such recommendations could deal effectively with the above- discussed concerns. However, as with any commission formed for the purposes of study and recommendation, delay and confusion could well result.

V. CONCLUSION

To focus on the status of foreign sovereigns and their interaction with American antitrust law is to focus on the tip of the iceberg of extraterritorial antitrust application. However, that focus reveals the basic differences in economic philosophy between the United States and the rest of the world. No other country has the developed antitrust policies nor an economic philosophy as predominately built upon the promotion of free enterprise as has the United States. In fact, many nations ignore the entire antitrust concept. Requiring these nations to appear in a U.S. court to defend against activity violative of U.S. laws could easily lead to international embarrassment. The OPEC nations, for example, would discount charges of price fixing and cartelization since these are the basic functions of the OPEC cartel. The United States must recognize the fact that much of the world disagrees, fundamentally, with the entire antitrust concept. However, developed antitrust law is critical to the survival of the Ameri- can economic system. Given that modern business is conducted across national boundaries, U.S. antitrust law must retain an international flexibility. The law, as it presently exists, is not applied consistently in an international context. Consider the plight of American corporations involved in business relationships with organizations of nations. They cannot band together to offset sovereign group activity in the international marketplace since any concerted American activity would, in all probability, violate U.S. anti-

92. S. 1010, 96th Cong., 2d Seas. (1979). 93. Id. § 2. DEN. J. INT'L L. & POL'Y VOL. 11:81 trust provisions. If they do violate the law, they face private treble damage actions instigated by the very force they desired to offset." To make matters worse, if the American corporation becomes involved in private litigation as a defendant, the defense of in pari delicto is not available against the foreign sovereign. If American corporations seek to use the antitrust provisions as a response to international group pressure, the result is similarly futile. A foreign state, first of all, is immune from suit unless involved in commercial activity in the United States. As shown above, much of this determination relies upon the definition of commercial activity, which has been defined broadly by some courts and narrowly by others. Yet, if it is decided that the activity is not protected by the FSIA, additional antitrust barriers must be overcome. The foreign nation may not be recognized as a "person" subject to U.S. antitrust law. Even assuming the elimination of that barrier, the act of state doctrine and the foreign sovereign compulsion principle almost assure a complete defense for the foreign sovereign involved. The courts have neither the means nor the authority to clarify the issues. To pass hurried legislation is hardly a better alternative. As has been pointed out, the current legislative alternatives have not attempted to grasp the entire problem. For example, the inclusion of conditions of reciprocity, although logically sound, requires an investigation which makes the proposal not feasible in an international setting. In addition, many of these concepts of reciprocal treatment would eliminate altogether the needed growth in antitrust law. It is doubtful whether an international agreement could effectively deal with monopolistic activity. Any agreement among nations would necessarily be voluntary in nature.'0 Antitrust laws affect the foundation of a nation's economic system. States that thrive upon government controlled group activity and price fixing cartelization are not going to ratify an agreement that may jeopardize their economic future. The solution lies in domestic legislation passed after a thorough investigation. The desire to

94. See Hearings on InternationalAspects of Antitrust Laws, Subcomm. on Antitrust and Monopoly Before the Sen. Comm. on the Judiciary,93d Cong., 1st & 2d Sess. 1416-37 (1973). Seventy percent of the firms responding to a questionnaire prepared by the National Association of Manufacturers indicated their belief that U.S. antitrust laws had impaired their ability to compete in international markets. Their concerns included the inability to respond to challenges from foreign cartels, intergovernmental friction over antitrust enforcement and uncertainty about the scope of antitrust laws as applied to foreign trade. 95. The United Nations has served as the catalyst for many such attempts, and, on December 5, 1980, the U.N. General Assembly adopted The Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, G.A. Res. 35/63, U.N. Doc. A/RES/35/63 (1980). These guidelines govern the restrictive business practices of states and transnational corporations, but not restrictive business practices which are the direct result of agreements between governments. See Development, Antitrust Law: United Nations Guidelines, 22 HARv. INT'L L.J. 405, 406 (1981). Also, the guidelines are not binding. Id. at 410. 1981 FOREIGN SOVEREIGNS IN ANTITRUST quickly correct the recognized problems should not lead to poorly conceived solutions which would only substitute inconsistencies and problems for those that presently exist. While the areas in need of investigation and reformulation can be readily determined, the problems are not so easily solved. The foreign nation's position as plaintiff must be reassessed. What is the reasoning behind granting the foreign sovereign treble damages while the United States is limited to single damages? The purpose of the treble damage provision was to motivate the private plaintiff to pursue antitrust violations. However, when foreign governments are involved, even assuming the lack of action by the Justice Department, the defenses available to a foreign sovereign are hardly comparable to those available to the individual private plaintiff. In fact, the need for a foreign state to enforce the U.S. antitrust law against American firms is questionable. Yet, many of the arguments for the "single damages" limitation are just as easily applied to the American states. More severe problems surface when the foreign sovereign is in the position of the defendant. The vagueness of the "commercial activity" exception to the FSIA must be recognized. It is the interpretation of the particular court involved that becomescritical. Some guidelines must be established. With respect to antitrust law, the dictates of the statutory provisions must lead to consistent interpretation regardless of international limitations. Although it must be recognized that there are acts of foreign states which will be immune from antitrust prosecution, no nation should be able to avoid an antitrust counterclaim if it seeks to challenge the activities of U.S. firms. In order to realize this goal, first of all, definitional and procedural issues must be resolved including the definition of a "person." Second, the in pari delicto defense must be revived. Past legislative proposals are headed in the proper direction. They have a consistent common goal which is to place the foreign sovereign on an equal footing with the U.S. government. Amending the Clayton Act to provide single damages for foreign states is directed to this end as is the promotion of antitrust protections around the world by requiring reciprocity. If reciprocity could be achieved, the U.S. government as well as U.S. corporations could pursue complaints of unfair trade practices abroad. However, the current legislative proposals require that the reciprocity determination be made by the Justice Department. One must question the practical consequences of such a determination since access may be denied a foreign state on a political, rather than a legal basis. Additionally, an expansion of the Webb-Pomerene exception may be needed to remedy some inequalities relating to nations that have no desire to develop any antitrust law because of their legal and economic systems. This entire discussion leads to one conclusion: The policy of antitrust application to foreign nations must be investigated and defined. A commission to investigate the total picture can only contribute to an increased sense of direction in this area. The courts have been pursuing .the 104 DEN. J. INT'L L. & POL'Y VOL. 11:81 development of an international antitrust policy without the benefit of overall issue clarification. The shortcomings of case-by-case decision making have become readily apparent. Clarification of the issues by a complete legislative investigation can only lead to more consistent results. DEVELOPMENTS

Canada's New Bank Act: Integration of Foreign Banks into the Canadian Banking System J.G. TAYLOR'

I. INTRODUCTION

Following three years of delay and six years of review, the Banks and Banking Law Revision Act was passed in Canada and became effective December 1, 1980.' The Act will, for the first time, enable foreign banks to enter mainstream banking in Canada as chartered banks (licensed by Parliament) while at the same time limiting the role of foreign bank subsidiaries to ensure that the Canadian "banking system remains predominantly in Canadian hands." The new Bank Act establishes two separate classes of banks 8 Under the Act, existing chartered banks will become Schedule A banks. Schedule A banks are widely held banks with relatively few limitations and encumbrances when compared with closely held or Schedule B banks.' The Schedule B category was created specifically to enable foreign bank affiliates operating in Canada to enter mainstream banking and be subject to federal regulation and oversight.6 Unlike Schedule A banks, Schedule B banks (foreign bank subsidiaries) are subject to periodic licensing, separate organizational limitations, individual and collective limitations on size and market share, restrictions affecting asset mix, and restrictions on asset location.' In short, the architects of the new Bank Act have been exceedingly diligent in their efforts to ensure that control of the financial system re-

*J.G. Taylor is currently an International Economist with Continental Bank and was formerly an Attache/Financial Economist with the Treasury Department assigned to the U.S. Embassy in Ottawa, Canada. 1. Banks and Banking Law Revision Act, 1980, ch. 40 [hereinafter cited as Bank Act]. 2. Canadian Dep't of Finance, White Paper on the Revision of Canadian Banking Leg- islation, Aug. 1976 [hereinafter cited as White Paper). 3. Bank Act §§ 5, 174(2)(e). 4. Schedule B banks are defined as banks with one shareholder holding more than 10% of issued voting shares. Bank Act § 174(2)(e). 5. Id. § 3. 6. Bank Act 88 28(5), 175(2), 302, 303(5)-(8). DEN. J. INT'L L. & POL'Y VOL. 11:105

mains predominantly in Canadian hands as was recommended by the 1976 White Paper on banking. 7 What is not clear, however, at this point in time, is whether the architects of the Bank Act were as diligent in adhering to the corollary recommendation in the White Paper which suggested the entry of foreign banks into Canadian banking in an effort to maximize competition in banking to the overall benefit of the industry. Cursory review at this stage indicates that the role afforded foreign banks in Canada, under the Bank Act, is so limited that their competitive impact on the industry will be minimal. The severe restrictions imposed on foreign banks under the Bank Act, when juxtaposed with the wide latitude afforded Canadian banks in the United States, has prompted considerable concern among U.S. banks and federal and state banking authorities. These concerns impelled numerous representations to the Canadian Government urging modification of the more severe aspects of the legislation prior to enactment. In addition to representations made by U.S. and other non-Canadian banks to the Senate and House Committees considering the Bank Act, the U.S. Government also made numerous representations to the Department of Finance on various versions of the Bank Act bill prior to passage. U.S. Government concerns were expressed not only through formal demarches made by the U.S. Embassy in Ottawa, but also by the Secretary of the Treasury directly and-in the Treasury Department's Report to Congress on the treatment of U.S. banks abroad.8 Despite some modifications in the Bank Act bill,9 the final Act falls far short of reciprocal or even national treatment for U.S. and other foreign banks.'0

II. OvRvIzw OF CANADIAN BANKING

Canada has a highly concentrated financial community dominated by the chartered banks. Chartered banks control over seventy percent of the assets of private financial institutions and five chartered banks control roughly ninety percent of the chartered banks' total assets. Despite the dominant positions of the chartered banks, so called "near" banks (trust, mortgage, loan, and finance companies) play a significant role in the financial community. Until passage of the revised Bank Act in December 1980, foreign banks were precluded from becoming chartered banks."

7. White Paper, note 2 supra. 8. U.S. DRP'T OF THE TREASURY,. REPORT TO CONGRESS ON FOREIGN GoVRNMv TREAT- MENT OF U.S. COMMERCIAL BANKING ORGANIZATIONS (Sept. 1979) [hereinafter cited as TREA- sURY REPORT TO CONGRESS). 9. The majority of these modifications resulted in the replacement of specific limitations and restrictions with language leaving the contested issues up to the sole discretion of the Inspector General of Banks. 10. In connection with Canada's endorsement of the 1976 OECD Declaration on Na- tional Treatment, the Canadian delegation formally notified the OECD that "banking and other financial" sectors were exceptions to the commitment to national treatment. OECD, DECLARATION ON NATIONAL TREATMENT (1976). 11. In 1963, First National City Bank of New York did, however, acquire 24% of Mer- 1981 DEVELOPMENTS

Consequently, foreign bank affiliates in Canada, including those controlled by U.S. banks, functioned primarily as wholesale finance companies. Chartered banks operate under the revised terms and provisions of the Bank Act which defines activities and regulates internal aspects of their operations as well as their relationship with the government and the Bank of Canada. The Federal Bank Act, passed originally in 1871, is subject to revisions every ten years, with the latest revision occurring in De- cember of 1980. Prior to the enactment of the 1980 Bank Act, there were only eleven chartered banks, all of which were federally chartered, i.e. licensed by Parliament. Since passage of the Bank Act, twenty-one foreign banks have been granted permission to operate as chartered (Sched- ule B) banks. At the end of 1980, there were approximately sixty foreign bank affiliates operating in Canada with total assets estimated at $10 billion (Cana- dian) dollars, which was just under three percent of the Canadian private financial market. U.S. banks controlled about two-thirds of the assets of all foreign bank affiliates. Foreign bank affiliates in Canada engaged primarily in wholesale financial services, leasing and factoring. There were, however, some notable exceptions. Bank of America had an extensive branch network providing retail financial services. Foreign bank affiliates were funded predominantly through the issuance of ninety day commercial paper, often guaranteed by the affiliate's parent, with these funds in turn being lent to corporate customers. Under the new legislation, U.S. and other foreign banks are permitted to set up subsidiaries as chartered banks in Canada.1s Foreign banks desiring a "low profile" presence in Canada are permitted to maintain a representative office in Canada and to act as liaison between the foreign bank and clients, but the representative office is specifically prohibited from active banking operations in Canada.1a Foreign banks are specifically prohibited from establishing branches in Canada."

III. INTEGRATION OF FOREIGN BANKS INTO THE CANADIAN BANKING SYSTEM

Entry of foreign banks in Canada will, in general, be determined on a case-by-case basis under the new Bank Act. The Inspector General of Banks, who reports to the Minister of Finance, is directed under the Act to focus on two criteria in assessing a foreign bank's application for entry or conversion to chartered bank status through the issuance of Letters

cantile Bank from a Dutch owner. This acquisition furthered growing national concern which culminated in the restrictive foreign ownership provisions of the 1967 Bank Act. 12. Bank Act § 302(2). 13. Id. § 302(2)(a), and Regulations Respecting the Registration and Operation of For- eign Bank Representative Offices, Can. Gaz., Pt. I, Dec. 20, 1980. 14. Bank Act § 302(1)(b). DEN. J. INT'L L. & POL'Y VOL. 11:105

Patent. The first is the potential contribution the bank can make to competitive banking in Canada. The second is the degree of reciprocity afforded Canadian banks operating in the applicant's home jurisdiction. Treatment must be as favorable for Canadian banks operating in the applicant's jurisdiction as the treatment that will be afforded the applicant in Canada. 15 The Inspector General will be afforded wide discretion in making these assessments and the issuance of Letters Patent will be at the sole discretion of the Finance Minister, subject to approval of the Cabinet through the Governor In Council." Foreign bank subsidiaries which are granted authority to commence and carry on the business of banking in Canada are subject to periodic licensing requirements.17 Domestic banks are not subject to the periodic licensing requirement. The license may, notwithstanding any other provision of the Bank Act, set forth restrictions and conditions on the conduct of banking by the foreign bank subsidiary which are, in the opinion of the Minister, expedient and necessary. 1 Moreover, banking licenses are subject to renewal at least annually for the first five years after which time they are subject to review at least every three years."9 Thirty days prior to license renewal, the Minister may inform the bank that the restrictions and conditions under which the bank is operating are to be altered or, in an extreme case, the Minister may inform the bank of the government's intentions not to renew the license.' 0

IV. FOREIGN BANK OPERATIONS UNDER THE NEW BANK AcT The new legislation, through severe restriction, will make it virtually impossible for foreign bank affiliates to operate in Canada under any other guise but as a chartered bank. A nonbank affiliate of a foreign bank is prohibited from engaging in the business of both lending and accepting deposit liabilities transferrable by check or other instrument. To assure that this prohibition is not circumvented, the Bank Act now precludes the establishment of two separate entities by a single foreign bank if one of the entities is engaged in taking deposits while the other entity is engaged in lending money. Clearly, a foreign bank affiliate engaging in general banking activities in Canada can do so only in the form of a chartered bank."1 Moreover, in an effort to provide a strong inducement for foreign bank affiliates currently operating in Canada as finance companies to convert to chartered bank status, the Bank Act prohibits a nonbank affiliate of a foreign bank that engages in the business of banking from borrowing

15. Id. § 8(d). 16. Id. § 7(2). 17. Id. § 28(5). 18. Id. § 28(6). 19. Id. 20. Id. § 28(7). 21. Id. § 303(5). 1981 DEVELOPMENTS money or issuing market securities on the guarantee of its parent." The prohibition against the use of a parent's guarantee to raise funds in capital markets is, perhaps, the strongest inducement for foreign bank affiliates established in Canada to convert to chartered bank status. It should be noted, however, that some foreign bank affiliates have tested domestic financial markets with unguaranteed paper and found relatively little resistance. Even without the explicit guarantee of the parent bank, some bank affiliated finance companies will be viewed as having an implicit guarantee and will meet relatively minor resistance to the issuance of their paper. This resistance may, however, result in a slight increase in the cost of funds through this mechanism. Foreign bank subsidiaries which convert to chartered bank status will be permitted to continue using the parent's guarantee. Under the Bank Act, most foreign bank affiliates operating in Canada will find it in their interest, and indeed, find it almost impossible not to convert their operations to Schedule B bank operations. This conversion will, however, subject these bank affiliations to the same reserve requirements-both primary and secondary-as chartered banks, resulting in an increase in funding costs.'8 As finance companies, foreign bank affiliates funded their operations predominantly through the issuance of ninety day commercial paper. Imposition of reserve requirements on foreign bank subsidiaries will add to their financing burden. In terms of cost of funds, the biggest advantage foreigil bank affiliates will reap through the conversion to chartered bank status is the exemption of chartered banks from withholding tax for interest payments paid on foreign currency deposits.84 This exemption is in addition to existing United States-Canada treaty exemptions and will enable well-established foreign bank subsidiaries to tap the Eurocurrency market for funds. Prior to conversion to chartered bank status, foreign bank affiliates would only be able to tap the Eurocurrency market if they were willing to absorb the withholding costs and remit interest payments net of withholding. Consequently, foreign bank affiliates were effectively excluded from tapping this source of funds.

V. SPECIFIC LIMITATIONS IMPOSED ON FOREIGN BANKS

To ensure Canadian control of the banking system, the Bank Act im- poses numerous limitations and restrictions on the Canadian subsidiaries of foreign banks. The total asset share of the Canadian market to be allo- cated to foreign bank subsidiaries under the new Bank Act will be limited to eight percent of total domestic assets of all banks in Canada.38 At the

22. Id. § 303(8). 23. The minimum cash requirement for each chartered bank is 11 V % of reservable Canadian dollar demand deposits, 1 % of reservable Canadian dollar notice deposits in excess of $500 million, and 3% of Canadian residents' foreign currency deposits. 24. Income Tax Act, 1970, ch. 63, § 212(1)(B) (amended 1971, 1972). 25. Bank Act § 302. Domestic assets are determined by reference to Schedule Q filed DEN. J. INT'L L. & POL'5 VOL. 11:105

time of passage, overall domestic assets earmarked for foreign bank subsidiaries amounted to approximately $14 billion (Canadian) according to the Inspector General's Office.26 Assets of foreign bank affiliates operating in Canada in December 1980 are estimated to have amounted to $13 billion (Canadian), of which approximately $10.7 billion (Canadian) were domestic currency assets."7 Consequently, available estimates indicate a growth potential in Canada for foreign banks of $3.3 billion (Canadian), which is not much when one considers the fact that banks from Japan, Latin America, and other nations not currently represented will take up a large portion of this potential. The use of domestic assets as the basis for allocating the market share afforded foreign banks was to encourage foreign bank subsidiaries to exploit nondomestic asset areas of growth. It is important to note that the Bank Act's focus on domestic assets provides foreign bank subsidiaries more latitude than would have been afforded had the overall bank limitation been set vis-&-vis total bank assets-as was originally proposed. In the past three years, Canadian dollar assets, a fairly accurate indicator of domestic assets, increased 65.8%, while foreign currency assets, an indicator of all nondomestic assets, increased 119.6% over the same period of time."8 The asset size of each individual foreign bank subsidiary is to be determined basically on an ad hoc basis by the Inspector General of Banks in conjunction with the periodic licensing process. The Act does, however, contain the following specifics concerning individual bank size. Schedule B banks are limited to twenty times authorized capital.2s The Act provides for a minimum capitalization of $5 million (Canadian) for Schedule B banks and $2 million (Canadian) for Schedule A banks.8 0 The Act is silent on the maximum permissible capital except to state that it will be determined by the Cabinet through the Governor In Council and, effectively, by the Minister of Finance. s" Prior to commencement of business, a Schedule A bank is required to have $1 million (Canadian) in paid-in capital, while a Schedule B bank is required to have $2.5 million (Canadian).82 If the level of paid-in capital is less than one-half of authorized capital at the time the bank com-

monthly in the Canada Gazette by Canadian banks. Schedule Q includes: (1) notes of and deposits with the Bank of Canada; (2) deposits with banks; (3) checks and other items in transit, net; (4) securities; (5) loans to investment dealers, Provinces, municipal corporations, banks, others and lease receivables; (6) mortgages; and (7) customers' liabilities under acceptances and other assets. 26. Data on domestic assets, as defined in Schedule Q, was not compiled prior to Nov- ember 1981. 27. U.S. bank affiliates accounted for roughly two-thirds of this amount. 28. BANK OF CAN. REV., Mar. 1981. 29. Bank Act § 174(2). 30. Id. § 116(1). 31. Id. 32. Bank Act § 27(1). 1981 DEVELOPMENTS mences operations, the authorized capital is automatically reduced to a multiple of $1 million (Canadian) but not greater than twice-issued capi- 83 tal. Schedule B banks may be granted six months to meet the paid-in capital requirements.8' An ancillary limitation imposed on foreign banks is that foreign bank subsidiaries are limited to a main office and one branch, with establishment of additional branches subject to ministerial approval."8 Under the Act, a foreign bank subsidiary operating as a bank in Ca- nada is required to maintain assets in Canada at least equal in value to the aggregate of the liability of the foreign bank subsidiary to residents of Canada, and to the paid-in capital of the foreign bank subsidiary.36 Banks, including foreign bank subsidiaries, are required to prepare and maintain in Canada all bank records required by the Bank Act. Moreover, if a foreign bank's subsidiary maintains copies or extracts of any records or further processes information or data on the bank's Cana- dian banking operations, the bank is required to inform the Inspector General and to provide him with a description of the records as well as a description of the further processing of these records.87 In effect, the new Act requires foreign bank subsidiaries to duplicate data processing done at the head office as part of the bank's worldwide operations in order to satisfy the requirement that the records concerning the bank's Canadian operations be generated, processed, and maintained in Canada. A foreign bank or corporation associated with a foreign bank which owns shares in a foreign bank subsidiary in Canada is precluded from acquiring or owning shares in any bank other than the foreign bank subsidiary. Also, there is an ownership limit of not more than ten percent of the total voting shares of"any other corporation whose principal activity in Canada consists of providing banking, fiduciary, investment, or insurance services. There is, however, a proviso whereby the Minister of Fi- nance is permitted discretionary latitude in granting exceptions to this prohibition under certain conditions." This exception was specifically incorporated into the statute to accommodate several European banks faced with this problem."' The Bank Act provides, subject to ministerial approval, for the grandfathering of certain assets as long as the assets were held at the time of the application for Letters Patent incorporating the foreign bank

33. Id. § 29(1). 34. Id. § 29(2). 35. Id. § 173(2). There is a proviso in the Bank Act which permits, subject to ministerial approval, grandfathering of existing branches. This proviso was included to permit Cit- icorp and Bank of America to maintain their extensive branch networks. 36. Id. § 175(2). 37. Id. § 155. 38. Id. § 305. 39. White Paper, note 2 supra. DEN. J. INT'L L. & POL'Y VOL. 11:105 subsidiary.' 0 The following types of assets can be grandfathered under this provision: (1) otherwise prohibited assets which consist of shares of a corporation incorporated under federal or provincial law provided the shares were held by the foreign bank subsidiary's parent, the parent's holding company, or an affiliate of the parent;" and (2) assets held by nonbank affiliates of the foreign bank subsidiary's parent, or branches which are not otherwise permitted by the Bank Act if such branches replace branches of a corporation incorporated by or under federal or provincial jurisdiction, provided such branches are affiliates of the foreign bank subsidiary.'2

VI. CONCLUSION

Canada's new Bank Act undeniably improves the position of foreign banks in Canada. The Act does, however, fall short of a reasonable and justifiable approach to the treatment of nofi-Canadian banks. Canadian chartered banks are major, highly competitive international financial institutions which do not require protection from foreign competition in the domestic market. Moreover, the prominent position of Canadian banks in the United States and the better than national or reciprocal treatment afforded Canadian banks in the U.S. market argue persuasively for further liberalization of the treatment of U.S. banks in Canada. The Senate Committee on Banking, in its Report on the Interna- tional Banking Act of 1978,"8 argued that the U.S. Government, "in light of the substantial privileges enjoyed by foreign banks in the United 4 States should seek to secure national treatment for our banks abroad." The Treasury Department's conclusions and recommendations contained in the Report to Congress on Foreign Government Treatment of U.S. Commercial Banking Organizations"8 was critical of some aspects of the then pending banking legislation in Canada, but did not have the benefit of final legislation and, consequently, the Department was unable to make concrete recommendations to Congress concerning the Canadian Government's treatment of U.S. banks operating in Canada. Banking legislation has now been enacted in Canada which does not provide for national treatment, i.e. equality of competitive opportunity is not ensured.46 In the Report, the Secretary of the Treasury did, however, recommend

40. Id. § 28(8). 41. This exception applies primarily to European banks whose holding companies maintain interest and control unrelated corporations in Canada which would otherwise be prohibited under the law. 42. Primarily, this affects operations such as Citicorp Canada, Ltd. and Bank of America, both of which have extensive branching operations connected with their current activities as finance companies. 43. International Banking Act of 1978, 12 U.S.C. § 3101 (1978). .44. SENATE COMM. ON BANKING, HOUSING AND URBAN AF'PAIRS, S. REP. No. 1073, 95th Cong., 2d Sess. 1429 (1978). 45. TREASURY REPORT TO CONGRESS, note 8 supra. 46. International Banking Act of 1978, 12 U.S.C. § 3101 (1978). 1981 DEVELOPMENTS that "the Department of Treasury, in collaboration with other U.S. Gov- ernment agencies .. should continue the implementation of. . . reme- dial efforts 4 7 to press for adherence to the principle of national treatment. Consequently, the new banking regime in Canada will undoubtedly command the continued attention of interested Washington agencies as well as the international banking community. Under the newly established regime, the potential for major growth of U.S. banks in Canada is severely limited. Unfortunately, prospects for significant liberalization of major constraints are dismal given the political realities in Canada and the current surge of Canadian nationalism. •

47. TREASURY RRfpoRr To CONGRESS, note 8 supra.

Export Trading Companies and S. 734

INTRODUCTION On April 8, 1981, the U.S. Senate unanimously passed Senate Bill 734, announced by the legislative clerk as "a bill to encourage exports by facilitating the formation and operation of export trading companies and export trade associations, and the expansion of trade services generally."1 The bill, sponsored by Senator John Heinz of Pennsylvania, is essentially the same bill as S.2718, which passed the Senate unanimously in Sep- tember 1980 but which died in the House of Representatives at the end of the year due to inaction.' S. 734 is expected to pass the House and become law this year. The bill could be an important step in improving the balance of payments deficit. This development examines the content of the enactment, the circumstances which produced the initiative for the bill and to which it is addressed, and pro and con views of its utility. A critique of the prevailing arguments will then be made and a conclusion reached.

SUBSTANCE OF THE BELL In brief, S. 734 confronts the capital problems of Export Trading Companies (ETC's) by providing for limited bank investment in ETC's. With respect to the antitrust issue, the bill makes a procedural reform in the existing Webb-Pomerene Act of 1918.' The language4 of the title, however, does not modify substantive antitrust law. Among the most important Title I provisions, section 104 directs the Secretary of Commerce to promote export trading companies by providing information on such companies to U.S. producers.' Section 105 permits banks to make limited investments in export trading companies. s Section 106 directs the Export-Import Bank to develop an improved guarantee program to support commercial loans to U.S. exporters, such

1. 127 CoNG. Rac. S. 3622 (daily ed. Apr. 8, 1981) (hereinafter cited as 127 CoNG. RBC.). 2. S. 2718, 96th Cong., 2d Seas. (1980). 3. 15 U.S.C. §§ 61-66 (1976). 4. 127 CONG. Rzc., supra note 1, at S. 3623. 5. S. 734, 97th Cong., 1st Seas. 104 (1981). An export trading company is defined under section 103(5) as: [a] company ... which does business under the laws of the United States or any State and which is organized and operated principally for the purposes of (A) exporting goods or services produced in the United States, and (B) facilitating the exportation of goods or services produced in the U.S. by unaffiliated persons by providing one or more trade services. 6. Id. § 105. Such investments could not exceed five percent of the banking capital, and all controlling investment and all investments over $10 million, would be subject to prior approval and conditions imposed by federal bank regulatory agencies. DEN. J. INT'L L. & POL'Y VOL. 11:115 loans to be secured by export accounts receivables or inventories of ex- 7 portable goods. Title II -revises the Webb-Pomerene Act in order to clarify antitrust provisions applicable to export trade associations and export trading companies.8 It provides a certification procedure which would enable such associations and companies to obtain antitrust preclearance for specified export trade operations. The clearance procedure attempts to facilitate exports by permitting firms to determine in advance exactly which export trade activities would be immune from antitrust suit. Administration of the certification procedure would be shifted to the Commerce Depart- ment, which would also be given the responsibility of monitoring for violations.

INITIATIVE FOR BILL A. Background and Source of the Problem Increased U.S. imports in the past few years, led by massive increases in the cost of oil, have expanded the trade deficit dramatically.' American companies have traditionally. neglected export markets and the U.S. Gov- ernment has given little incentive to enter them.10 Former Undersecretary of Commerce Robert E. Herzstein has noted that only 10% of the 250,000 American manufacturers currently export.II Less than 1% of manufacturers are responsible for 80% of all exports."2 Additionally, exports of goods account for only about 7.5% of the U.S. gross national product, the low- est of any industrialized nation.' U.S. trade competitors have used exports much more effectively in offsetting their imported energy bills."

7. Id. §106. 8. Id. §§ 201-207. For a good summary of the certification procedure, see Neill, Export Trade Associations, 37 J. Mo. B. 55, 56 (1981). 9. Although the ratio of exports to GNP rose from 4.2% in 1972 to 7.5% in 1979, U.S. imports grew equally as fast, increasing in importance relative to GNP from 5.1% to 8.7% in the same years. Because imports have expanded since 1972 from a higher base than exports, the trade deficit has expanded sharply. 127 CONG. REc., supra note 1, at S. 3622 (remarks of Senator Heinz). 10. The importance of exports to our economy is well summarized by former Secretary of Commerce Phillip Klutznick: Exports are essential to the strength of the U.S. and contribute significantly to U.S. jobs, production, and economic growth. Exports enable important economies of scale, thereby contributing to the most efficient use of U.S. resources. Exports provide thWemost constructive way of paying for U.S. imports of petroleum and other essential commodities, and thus keep the dollar firm. Hearings on H.R. 7436 Before the Subcomm. on FinancialInstitutions of the House Comm. on Banking, Finance, and Urban Affairs, 96th Cong., 2d Ses. (1980) (statement of Phillip M. Klutznick) [hereinafter cited as Hearings on H.R. 7436]. 11. NAT'L J., June 21, 1980, at 1018. 12. Id. 13. Hearings on H.R. 7436, note 10 supra. 14. 127 CONG. Rac., supra note 1, at S. 3622. According to a study performed by the National Association of Manufacturers in 1980, "[ojur industrial competitiveness is declin- 1981 DEVELOPMENTS

The situation is not, however, as unmanageable as it may seem. It has been observed that if U.S. exports were to increase by only one per- 'centage point of the GNP, that would represent nearly $3 billion-a significant portion of the merchandise trade deficit. 18 Former Secretary of Commerce Phillip Klutznick has pointed out that "enormous as its oil bills are, the U.S. could be paying for imported oil without running a balance of trade deficit if it'had maintained the same share of world exports (22.8%) as it had in 1960.""' A major reason for the lack of interest in exporting is that U.S. firms find it easier to sell domestically, with the large markets, familiar customs, native language, and efficient distribution system."7 The numerous and confusing documentary, financial, and legal constraints associated with exporting have also been a major factor in discouraging businessmen from entering export markets. Letters of credit, exchange rates, ocean shipping documents, export licenses, import certificates, certificates of origin, currency hedges, shipping differentials, and a great number of related concepts, must be understood and applied by the administrative or non-income producing staff of a manufacturing corporation.10 Usually, this is too much for small businesses to absorb, and executives decide to forego the profits associated with an export operation to avoid the problems.1'

B. Proposed Solution-EncourageExport Trading Companies The approach conceived to surmount these barriers is to encourage the development of export trading companies. These service-providing companies would perform some or all of the functions that intimidate small businessmen. The range of services offered by an ETC could vary. A larger ETC might buy the goods from the domestic source and then sell them abroad itself, assuming all the risk and responsibility.'0 A smaller ETC might merely act as an agent, providing marketing advice by finding a market and helping arrange a purchase, but leaving the seller on his own to complete the transaction." An ETC could also provide a wide range of other services to the ex-

ing measured both by increased import penetration here, and loss of export markets elsewhere." The U.S. has lost market share in eight European Community countries, and in twelve of the thirteen OPEC countries. While U.S. manufactured goods trade has stayed in rough balance, Japan and West Germany had surpluses of $70 and $60 billion, respectively. Id. The U.S. share of world markets declined from 21.3% to 17.7% over the past ten years, the largest relative decline among major industrial exporters. Hearings on H.R. 7436, note 10 supra. 15. Hearings on H.R. 7436, note 10 supra. 16. Id. 17. NAT'L J., supra note 11, at 1018. 18. Neill, Export Trade Promotion Legislation, 36 J. Mo. B. 449 (1980). 19. Id. at 449-50. 20. 127 CONG. REc., supra note 1, at S. 3622. 21. Id. DEN. J. INT'L L. & POL'Y VOL. 11:115 porter. For example, it could help an exporter obtain necessary government licenses and approvals, arrange financing for transactions, or locate and engage transportation for the shipping of goods." There are any number of possible variations of services that could be offered, but all function to remove or reduce risk and unfamiliarity of foreign marketing for the domestic businessman."3 ETC's are already in common use by European and Japanese companies. Most European and Japanese companies have access to large, so- phisticated, general purpose trading companies that perform the full range of services for exporters or potential exporters."' Such companies are purported to be highly effective at opening new markets to small and medium sized businesses." Those ETC's thought to be the most effective are usually closely associated with major banking institutions in these countries, the association ranging from a close working relationship to actual bank ownership and control of an ETC." C. Proposed Legislative Action to Encourage ETC's In examining why ETC's today do not exist in adequate numbers, the sponsors of S. 734 determined that there are two major problems which could be addressed through legislation: undercapitalization and antitrust uncertainties.' 7 It was decided that the go~1s of export trading company legislation, among other things, would be to encourage capital investment in ETC's, and to reduce the fear and doubt of antitrust prosecution for potential export trading companies.

REACTION TO THE BILL A. Proponents Sponsors of the bill in the Senate believe that ETC's will significantly increase U.S. exports, particularly those of small and medium sized businesses."1 They believe that by encouraging the development of such intermediaries, the barriers inhibiting U.S. firms from exporting will be lowered."9 ETC's, they contend, will benefit companies wishing to export, through creation of economies of scale and by diffusion of risk.80 Senator Bentsen stated in the Senate that ETC's have been an essential ingredi- ent in the commercial success of countries like Japan, which "have emerged as consistent winners in the battle for exports."31 He contends

22. Id. 23. Id. 24. Neill, supra note 18, at 450. 25. Id. 26. Id. 27. 127 CONG. REc., aupra note 1, at S. 3622. 28. 127 CONG. Rzc. S. 257 (daily ed. Jan. 19, 1981). 29. Id. 30. Id. 31. 127 CONG. RE C., supra note 1, at S. 3661 (comments of Mr. Bentsen). The top 10 1981 DEVELOPMENTS that: The provisions of S. 734 would encourage thousands of smaller and medium sized U.S. businesses-currently put off by the risk and complexity of exporting-to go after international markets. Trading companies of the type envisioned by this legislation will help spread out the risks of foreign trade and absorb currency fluctuations. They will help identify emerging market opportunities, assist in organizing joint construction projects abroad, and handle the logistics of foreign trade that presently deter so many potential exporters." Senator Bentsen additionally points out that this legislation helps clarify many of the longstanding antitrust ambiguities that hinder the formation of American consortia to bid on significant export projects."88 Proponents also argue that allowing banks to invest in ETC's would be a very effective way to encourage the growth of ETC's. It is argued that banks bring to bear their investment capital, international networks, and international financial expertise. Consequently, these institutions have the best chance of making export trading companies significant con- tributors to increased American exports." Senator Bentsen points out that while the United States has traditionally discouraged relationships between banks and trading companies, other countries have not had such laws, and have frequently gained a competitive advantage over U.S. exporters."8 As he maintains, "by permitting U.S. banks to acquire ownership in export trading companies under specified conditions and with appropriate safeguards, S. 734 would provide an important new.asset in our drive to restore competitiveness to the American economy."' 6 B. Opponents The AFL-CIO opposes S. 734, claiming that the bill ends the traditional U.S. legal separation between banking and commerce.' 7 They warn that allowing banks to invest in ETC's is "a risky move where government banks are already 'loaned-up.'" In other words they fear that bank failures might be precipitated."s They contend that allowing the lender and exporter to become "one" under this legislation would be "a damaging change in U.S. law."" Another argument of the AFL-CIO is that allowing banks to invest in

Japanese trading companies, the so called s0go shosha8, account for over 50% of that country's total trade, which involves thousands of products worldwide. For an excellent work on the Sogo Shosha see A. YoUNG, SoO SHOsHA: JAPAN'S MULTINATIONAL TRADiNo COMPANMS (1979). 32. 127 CONG. Rac., supra note 1, at S. 3661. 33. Id. 34. 127 CONG. REc., supra note 1, at S. 3627 (comments of Mr. Tsongas). 35. Id. at S. 3662. 36. Id. 37. Id. at S. 3624. 38. Id. 39. Id. DEN. J. INT'L L. & POL'Y VOL. 11:115

ETC's will result in an increased competition for funds and dimunition of capital for productive investments, at a time when banks and commercial enterprises in the United States are claiming capital shortages. 0 They fear that such a misappropriation of capital funds would cost U.S. jobs. The Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) testified before the Senate that bank investment in export trading companies posed unacceptable risks to the U.S. banking system.' Their recommendation was that exports could best be served by banks continuing their role as financiers, but not allowing investments which would jeopardize bank capital in the highly leveraged, risky operations of an export trading company." Senator Proxmire objects to the provisions of the bill which would switch to the Commerce Department the responsibility for administering antitrust statutes with respect to the ETC's. He points out that the Com- merce Department has no expertise in administering antitrust statutes."' He fears that this legislation'will result in inconsistent, wasteful, and overstepped bank regulation instead of a consistent and coherent bank regulatory policy, and will result in less competition "while price fixing in domestic and international markets gets a wink from the Commerce De- partment."" He believes that the Commerce Department will find itself in a position of fundamental conflict of trying to balance effects on domestic price and overseas trade."6 It has also been argued that the goals of the bill are contradictory and self-defeating.' On the one hand, smaller companies are encouraged to get into the export business themselves in that the Export-Import Bank is authorized through the bill to provide loan guarantees when secured by export accounts receivable or inventories."7 On the other hand, the bill recognizes the benefit of pooling resources and obtaining economies of scale and strong financial backing in the formation of large, bank- dominated trading corporations." s The effectiveness of some of the bill's provisions has also been challenged. The U.S. Department of Commerce is already charged with the responsibility of providing information and advice on exports." Allowing

40. Id. 41. Id. at S. 3625. 42. Id. 43. Id. 44. Id. 45. Id. 46. J. Brown, Export Trading Corporations (Nov. 5, 1980) (unpublished memo for the Manville Corporation). 47. Id. 48. Id. 49. Id. Brown feels that the problem in this area is with budget and staffing, which has been grossly neglected in comparison to other countries. Robert Herzstein has also written: The corps of commercial officers in the foreign service of the United States is only 250, while the Japanese have that many in a single country. The French 1981 DEVELOPMENTS banks limited investment in ETC's will not necessarily give the banks great incentive to do so.50 Finally, the question has been raised whether the procedural reform of the Webb-Pomerene Act in Title IIwill change industry attitudes significantly toward Webb-Pomerene Associations, since in the past they have been used almost exclusively by commodity- type industries having product homogeneity.61

CRITIQUE OF ARGUMENT In weighing the strength of the arguments of the proponents and opponents of the bill, one is immediately struck by the fact that the Senate voted unanimously in favor of the bill. In these political times of factious interest groups, this is a fairly strong indication that the bill has not been received as very controversial. The fears of the AFL-CIO, the Federal Reserve, and the FDIC seem a bit exaggerated. The bill contains adequate safeguards to ensure that banks will not overextend themselves by investing in ETC's. The amount banks are permitted to invest in ETC's is not of such a magnitude as should breed concern of a capital shortage that would hurt American pro- ductivity. Besides, investment in ETC's would be an investment in Amer- ican companies and would create American jobs. The bill has been criticized for simultaneously encouraging small, fragmented export operations and the development of large export trading companies. This writer believes, however, that there are legitimate needs for both. Some specialized product lines will probably be better served by their own specialized marketing system than by using a large ETC. Moreover, the choice given to a potential exporter of either developing his own system with the aid of the export-import bank loan guarantees or using an ETC will force ETC's to be competitively priced and efficiently operated. Banks will have incentive to invest in ETC's if the return appears worthwhile in view of the risks. The banking industry will welcome the relaxation of the rule concerning bank investment in industry. Banking is a very competitive industry and new sources of revenue are graciously received. One should not be concerned that banks will blindly and overzealously start to invest in ETC's. The traditionally conservative

have more commercial officers in the U.S. than we have worldwide. The U.S. has a commercial service approximately the size of Hong Kong's. NAT'L J. supra note 11, at 1020. 50. J. Brown, note 46 supro. Brown believes there are still so many restrictions on the amount of investment and control of the ETC that such investments may not be so attractive. 51. Id. Brown points out that in the past, WPA's have been used most widely in commodity-type industries having product homogeneity: fungible nontrademarked goods such as minerals or agricultural products. According to Brown, industries which stress product differentiation and brand names have not found WPA's to be attractive. There would seem to be no new incentive in S. 734, he says, to change this traditional use pattern. DEN. J. INT'L L. & POL'Y VOL. 11:115 banking industry still would subject any potential investment in an ETC to the same strict financial scrutiny it uses in its other operations. As to the Webb-Pomerene reforms in Title 1I of the bill, only time will tell whether the changes made will remove antitrust ambiguity and encourage Webb-Pomerene Associations. Perhaps exporters will feel more comfortable with Commerce Department administration of the antitrust laws and less inhibited about moving into export marketing. In support of the bill, there can be no argument that export legislation is badly needed. The concept of encouraging ETC's is a good one; ETC's may well convince firms that never considered doing so to export. The question remains, however, whether the present bill has enough teeth to viably further the goals. The most important aspect of this legislation is that the Senate has at least begun to realize the importance of export legislation. The bill has attracted congressional attention to the issues, and has received unanimous support, albeit in a diluted form. If the bill becomes law and proves ineffective, which it may, it will still lay the groundwork for stronger and more effective legislation.

CONCLUSION

In conclusion, as this bill is being considered by the House of Repre- sentatives, this writer aligns himself with the view of Senator Heinz: In my judgment this [final form of bill] is an overly conservative approach designed to calm unrealistic fears. However, the bill is a product of a good deal of compromise-compromise with two admin- istrations, compromise with bank regulatory agencies, and compromise between numerous Senators, and . . . I can say they are com- promises I am prepared to support. I do not feel, however, there is much more room for compromise if we are to have a bill that has any meaning.61 The bill has been substantially diluted through compromise since its original conception, and may not dramatically resolve the trade deficit by itself, but it represents an important step in the right direction.

David K. Schollenberger

62. 127 CONG. REc., supra note 1, at S. 3623. 1981 DEVELOPMENTS Comprehensive Guidelines For The Commercial Activities Exception Of The Foreign Sovereign Immunities Act: Texas Trading & Milling Corp. v. Federal Republic of Nigeria

In Texas Trading & Milling Corp. v. Federal Republic of Nigeria,' the court establishes the first comprehensive test for finding jurisdiction over a foreign state under the commercial activity exception of the For- eign Sovereign Immunities Act (Immunities Act).' Congress intended that the Immunities Act provide a "comprehensive jurisdictional scheme in cases involving foreign states" and that a "uniformity of decision" would result.' Uniformity is desirable because disparate treatment of foreign states might have adverse foreign policy consequences. Decisions constru- ing the Immunities Act have so far been quite varied. In particular, interpretations of the key commercial activity exception to sovereign immunity' have resulted in diverse opinions. Consequently, the Texas Trading decision is a welcome step toward a uniform construction of the Immuni- ties Act. I. FAcTs OF THE CASE Seven appeals involving the Immunities Act were decided on the same day by the Second Circuit Court of Appeals. Four of the appeals, including Texas Trading, were consolidated for decision since they in- 6 volved similar facts. As part of a massive building program, Nigeria contracted in 1975 to buy cement from suppliers all over the world. Four of the 109 contracts executed at that time were made with the plaintiffs, all New York corporations. Each contract called for the supplier to sell Nigeria 240,000 met- ric tons of Portland cement and required Nigeria to establish in seller's favor an irrevocable and confirmed letter of credit for the total amount due. Instead of establishing confirmed letters of credit at the banks specified in the contracts, Nigeria set up irrevocable letters of credit with the

1. 647 F.2d 300 (2d Cir. 1981). 2. The Foreign Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1330, 1332(a)(2)-(4), 1391(f), 1441(d), 1602-1611 (1976). 3. H.R. REP. No. 1487, 94th Cong., 2d Sees. 13, reprinted in 1976 U.S. CODE CONG. & AD. NEWS 6604, 6611 [hereinafter cited as HousE REPORT]. 4. 28 U.S.C. § 1605(a)(2) (1976). 5. The three other plaintiffs in the consolidated appeal with Texas Trading were: De- cor by Nikkei Int'l, Inc.; Chenax Majesty, Inc.; and East Europe Import-Export. The three other appeals also decided on the same day were Verlinden B.V. v. Central Bank of Nigeria, 647 F.2d 320 (2d Cir. 1981); Reale Int'l, Inc. v. Federal Republic of Nigeria, 647 F.2d 330 (2d Cir. 1981); and Gemini Shipping, Inc. v. Foreign Trade Org. for Chem. & Foodstuffs, 647 F.2d 317 (2a Cir. 1981). DEN. J. INT'L L. & POL'Y VOL. 11:123

Central Bank of Nigeria' and advised those letters of credit through Mor- gan Guaranty Trust Company of New York. Nigeria chose Morgan because of a longstanding relationship between Nigeria and Morgan.! In the summer of 1975, Nigeria began to realize it had ordered too much cement as its port facilities could not unload the ships fast enough.' With demurrage accruing rapidly, Nigeria cabled its suppliers and asked them to stop sending cement. As a result, in September, Central Bank instructed Morgan not to pay under the letters of credit unless the supplier submitted a statement from Central Bank that payment ought to be made. The four suppliers sued Nigeria and Central Bank alleging anticipa- tory breaches of the cement contracts and of the letters of credit. Nigeria and Central Bank did not dispute these claims. Instead, they claimed immunity from the jurisdiction of American courts under the Immunities Act. At the district court level, jurisdiction was found lacking in Texas Trading." However, it was found present in Decor by Nikkei Int'l, Inc. v. Federal Republic of Nigeria, East Europe Import-Export v. Federal Re- public of Nigeria, and Chenax Majesty, Inc. v. FederalRepublic of Nige- ria.10 The court of appeals found jurisdiction proper in all four cases."

II. THE FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976 Sovereign immunity is the principle of international law that grants a sovereign state immunity from the jurisdiction of the courts of other nations." The doctrine first appeared in American jurisprudence in The Schooner Exchange v. M'Faddon.1' Under the absolute theory of sovereign immunity, both the public and private acts of a sovereign nation are exempt from the jurisdiction of another nation's courts."' Under the restrictive theory of sovereign immunity, suits against a foreign government are permitted when that state is involved in commercial or business yen-

6. Central Bank is an instrumentality of the Nigerian government. 7. Central Bank used Morgan as its correspondent bank in the United States, and Mor- gan conducted myriad transactions on Nigeria's behalf. Central Bank sent its employees to Morgan for training and made it a regular practice to advise letters of credit through Morgan. 8. By July 1975, 260 ships full of cement were waiting in the harbor at Lagos/Apapa to unload. 9. Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 500 F. Supp. 320 (S.D.N.Y. 1980). 10. These three cases were consolidated for trial at the district court level. Decor by Nikkei Int'l, Inc. v. Federal Republic of Nigeria, 497 F. Supp. 893 (S.D.N.Y. 1980). 11. Thus, the district court decisions in Decor, East Europe, and Chenax were affirmed and Texas Trading was remanded for a trial on the merits. 12. T. GUITTARI, THE AMERICAN LAw OF SOVEREIGN IMMUNITY 9 (1970). 13. 11 U.S. (7 Cranch) 116 (1812). 14. T. GIU7TrAR, supra note 12, at 9. The Schooner Exchange exempted only public property from jurisdiction, but American courts subsequently extended immunity to a sovereign's private property as well thereby making absolute sovereign immunity the standard in American courts. Berizzi Bros. Co. v. Steamship Pesaro, 271 U.S. 562 (1926). 1981 DEVELOPMENTS tures.16 The Immunities Act was enacted by Congress in order to codify the restrictive theory of sovereign immunity." This act incorporates the restrictive theory by making a general grant of immunity to foreign states 7 and then listing exceptions to that immunity.' s The "commercial activity" exception with which Texas Trading is concerned provides that: A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere. and that act causes a direct effect in the United States ....1" Once a foreign state's activity is found to fall under any of the exceptions, including the commercial activity exception, the federal courts have jurisdiction over the foreign state under 28 U.S.C. § 1330.'0 Section 1330(b)

15. T. GurrrAR, supra note 12, at 9. In The Navemar, American courts began a new policy of deference to State Department decisions as to whether sovereign immunity existed. Compania Espahola de Navegacion Maritima, S.A. v. The Navemar, 303 U.S. 68 (1938). The trend begun in The Navemar became firmly accepted. See Republic of Mexico v. Hoffman, 324 U.S. 30, 35 (1945). This development was important as the Department of State, in 1952, embraced the restrictive view of sovereign immunity through the issuance of the Tate Letter. Letter from Jack B. Tate, Acting Legal Adviser of the Department of State, to Phillip B. Periman, Act- ing Attorney General (May 19, 1952), reprinted in 26 DEP'T ST. BULL. 984 (1952); also reprinted in Alfred Dunhill, Inc. v. Republic of Cuba, 415 U.S. 682, 711 app. 2 (1976). In deference to the executive branch, the judiciary branch followed the Department of State's lead. As a result, by the 1970's, the restrictive theory became the prevailing standard accepted by American courts. T. GiuTrrTAR, supra note 12, at 224. However, application of the restrictive standard by the courts and by the Department of State was not uniform. Furthermore, the Department of State began to realize it could implement foreign policy with less irritation if sovereign immunity questions were decided by the courts. See Timberg, Sovereign Immunity and Act of State Defenses: Trannational Boycotts and Economic Coercion, 55 Tax. L. Rsv. 1, 11-12 (1976). Since the courts were still bound by the Navemar line of cases, congressional action was necessary to give the courts back the power to decide sovereign immunity questions. As a result, the Foreign Sovereign Immunities Act was adopted by Congress in 1976. 16. The House Report states that the Immunities Act has four main objectives: (1) To codify the restrictive principle of sovereign immunity as presently recognized in international law; (2) to transfer the determination of sovereign immunity from the executive branch to the judicial branch, thereby reducing foreign policy implications and assuring litigants of a legal forum under procedures that insure due process; (3) to provide 'a statutory procedure for making service upon, and obtaining in personam jurisdiction over, foreign states; and (4) to provide the judgment creditor with a remedy to satisfy final judgment. Houss REPonT, supra note 3, at 6605-06. 17. 28 U.S.C. § 1604 (1976). 18. Id. §§ 1605-1607 (1.976). 19. Id. § 1605(a)(2) (1976). 20. Section 1330 provides: (a) The district courts shall have original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as DEN. J. INT'L L. & POL'Y VOL. 11:123

was intended as a long-arm statute,"1 and the requirement of minimum jurisdictional contacts is embodied in 1330(b).22

III. THE Texas Trading FIVE-PART TEST The Texas Trading court established a five-part test for finding personal jurisdiction under the commercial activity exception of the Immuni- ties Act: 1) Does the conduct the action is based upon or related to qualify as 'commercial activity'? 2) Does that commercial activity bear the relation to the cause of action and to the United States described by one of the three phrases of § 1605(a)(2), warranting the Court's exercise of subject matter jurisdiction under § 1330(a)? 3) Does the exercise of this congresssional subject matter jurisdiction lie within the permissible limits of the 'judicial power' set forth in Article III? 4) Do subject matter jurisdiction under § 1330(a) and service under § 1608 exist, thereby making personal jurisdiction proper under § 1330(b)? 5) Does the exercise of personal jurisdiction under § 1330(b) comply with the due process clause, thus making personal jurisdiction proper?"' This five-part test is unique. It is the first comprehensive test to determine jurisdiction under the commercial activity exception promulgated by any court. It is also unique in separating out subject matter, personal jurisdiction,' constitutional, and statutory questions.25

defined in section 1603(a) of this title as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of this title or under any applicable international agreement. (b) Personal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction under subsection (a) where service has been made under section 1608 of this title. 28 U.S.C. § 1330 (1976). 21. HousE REPORT, supra note 3, at 6611. 22. The minimum contacts standard intended by Congress is that of International Shoe v. Washington, 326 U.S. 310 (1945) and McGee v. International Life Insurance Co., 355 U.S. 220 (1957). In addition, sections 1605-1607 themselves are intended to prescribe the necessary contacts which must exist before U.S. courts can exercise jurisdiction over a foreign state. House REPORT, supra note 3, at 6611-12. 23. 647 F.2d at 308. 24. Two other courts before the Texas Trading decision indicated that the section 1605(a)(2) subject matter question and the section 1330(b) minimum contacts questions required separate determinations. The district court opinion in Decor, which Texas Trading affirms, separately determined the section 1605(a)(2) direct effects question and the section 1330(b) minimum contacts question. 497 F. Supp. at 893. In addition, the Waukesha court indicated that there should be two separate determinations. However, the minimum contacts question was the only part of the analysis pursued. Waukesha Engine Div., Dresser Americas, Inc. v. Banco Nacional de Fomento Cooperativo, 485 F. Supp. 490 (E.D. Wis. 1980). 1981 DEVELOPMENTS

In the course of their decisionmaking, most courts focus on the one element of the Immunities Act that determines the case before them. Yet, implicit in most analyses is a two-step test which involves an initial determination of whether the activity is commercial and a subsequent determination of whether personal jurisdiction exists. In making the second determination, most courts consider that if there are sufficient contacts to satisfy the commercial activity exceptions of section 1605(a)(2), the constitutional minimum contacts standards are also met.e These courts are reading sections 1330(b) and 1606(a)(2) together. The House Report notes that section 1605(a)(2) prescribes the necessary contacts which must exist before American courts can exercise jurisdiction over a foreign state and that section 1330(b) incorporates these standards by reference." In addition, the House Report indicates that section 1330(b) em- bodies the constitutional minimum contacts standards.'8 Therefore, satis- faction of section 1605(a)(2) does not necessarily mean that the due process clause requirements have been met. In making the second determination, other courts have held that if the constitutional minimum contacts standards are met, the section 1605(a)(2) standards are satisfied.'e These courts do not require a connection between at least some of the contacts and the cause of action. How- ever, the legislative history indicates that there should be a nexus between the contacts of the foreign state with the United States and the cause of action.' 0 The better reading of the Immunities Act and its legislative history is that the requirement of sections 1605(a)(2) and 1330(b) must be satisfied in separate analyses. This is the approach adopted by Texas Trading. A. Commercial Activity The Immunities Act defines "commercial activity" as: "lE]ither a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose."' The determination of whether the foreign state's activity is commercial is critical since the foreign state will be immune from jurisdiction if

25. One other court has made the distinction that subject matter jurisdiction under article III of the Constitution must also exist before jurisdiction under the Immunities Act can be found. Verlinden v. Central Bank of Nigeria, 488 F. Supp. 1284 (S.D.N.Y. 1980), a/f'd, 647 F.2d 320 (2d Cir. 1981). 26. See East Europe Domestic Int'l Sales v. Terra, 467 F.2d 806 (2d Cir. 1979); Chicago Bridge & Iron Co. v. Islamic Republic of Iran, 506 F. Supp. 981 (N.D. Ill. 1980); and Harris v. VAO Intourist, Moscow, 481 F. Supp. 1056 (E.D.N.Y. 1979). 27. HousE RnPosr, supra note 3, at 6611-12. 28. See note 22 supra. 29. Sugarman v. Aeromexico, Inc., 626 F.2d 270 (3d Cir. 1980). 30. House REPORT, aupra note 3, at 6617. 31. 28 U.S.C. § 1603(d) (1976). DEN. J. INT'L L. & POL'Y, VOL. 11:123 the activity is sovereign. In order to reach this threshold determination, the Texas Trading court looked to three sources as guides for ascertaining the meaning of commercial activity: the legislative history of the Im- munities Act,82 American case law prior to the passage of the Act,88 and the current standards of international law.u Under each of these three, Nigeria's cement contracts and letters of credit were found to qualify as commercial activity. The legislative history indicates that the courts should be given a great deal of latitude in determining what is a commercial activity and illustrates, as examples of such activity, contracts for the sale of goods and the borrowing of money. The House Report also emphasized that it is the nature of the act, not the foreign state's purpose in engaging in the activity that is determinative." The Texas Trading court seemed to em- brace these concepts. The fact that the holding in Texas Trading relies on American case law prior to the passage of the Immunities Act is unusual. In fact, United Euram v. U.S.S.R." held that Victory Transport""was superceded by the Immunities Act. United Euram seems to be a better reasoned opinion than Texas Trading, as the Euram court noted that the Immunities Act focuses on the nature of the activity, not the purpose.8 Although the Texas Trading court's reasoning seems a bit obscure, the cases cited by the court as precedent are cited for the proposition that contracting for the shipment of goods is commercial activity when engaged in by sover-

32. The court also relies on the Hearings on H.R. 11315 Before the Subcomm. on Ad- ministrative Law and Governmental Relations of the House Comm. on the Judiciary,94th Cong., 2d Sess. 53 (1976) [hereinafter cited as 1976 Hearings] and the Hearings on H.R. 3493 Before the Subcomm. on Claims and Governmental Relations of the House Comm. on -the Judiciary,93rd Cong., let Sass. 16 (1973). These were hearings held on the first version of the Immunities Act which was not passed by Congress. 33. The court cites Isbrandtaen Tankers, Inc. v. President of India, 446 F.2d 1198 (2d Cir. 1966), cert. denied, 385 U.S. 931 (1966), and Victory Transport, Inc. v. Comisaria Gen- eral de Abastecimientos y Transportes, 336 F.2d 354 (2d Cir. 1964), cert. denied, 381 U.S. 934 (1965). 34. The international sources relied on by the court are: The State Immunity Act 1978, § 3 (U.K.), reprinted in 48 HALsBuRY's STATUTES OP ENGLAND 85 (3d ed. 1979) [hereinafter cited as 48 HALSBURY'S SAr'uma). Council of Europe, European Convention on State Immu- nity, art. 4 (1972), reprinted in 1976 Hearings, supra note 32, at 37-38; Claim Against The Empire of Iran, 45 I.L.R. 57 (W. Ger. BVerfG 1963); and Trendtex Trading Corp. v. Central Bank of Nigeria, (19771 Q.B. 629. 35. HousE RmPoRT, supra note 3, at 6614-15. 36. 461 F. Supp. 609 (S.D.N.Y. 1978). 37. Victory Transport, Inc. v. Comisaria General de Abastecimientos y Transportes, 336 F.2d 354 (2d Cir. 1964), cert. denied, 381 U.S. 934 (1965). According to Victory Transport, if the foreign state's act fell into one of five categories, the state was immune from jurisdiction. The five categories were: internal administrative acts, acts concerning the armed forces, legislative acts, acts concerning diplomatic activity and public loans. 336 F.2d at 360. 38. Thus, according to Victory Transport, buying goods for a foreign state's army would be a sovereign act. However, under the Immunities Act, it would be a commercial act. See HOUSE REPORT, supra note 3, at 6614-15. 1981 DEVELOPMENTS eign states."' Of more significance, however, is Texas Trading's reliance on international sources to give content to the term "commercial activity." The sources relied on accept the "nature" test for commercial activity' and indicate that contracts for the supply of goods and financial arrangements are commercial activities." In general, the test for commercial activity to be deduced from these sources is whether the foreign state has exercised its sovereign authority or acted as a private person."2 The use of international sources is a desirable step since sovereign immunity decisions often have political ramifications. Thus, one court has indicated that "commercial activity" should be defined narrowly so as to "keep the courts away from those areas that touch very closely upon the sensitive nerves of foreign countries." ' Another court has noted that "commercial activity" need not be narrowly construed." Yet, it is desirable to define the term as most countries operating under the restrictive theory define it. Perhaps those "sensitive nerves" will not be avoided, but the decisions of the U.S. courts to exercise jurisdiction will be backed by a consensus of world opinion.46 Although not specifically stated by the court, the Texas Trading test for commercial activity synthesized from all these sources seems to be: Presuming that contracts for the sale of goods are commercial activities, is the activity one in which a private person could engage?

B. Statutory Subject Matter Jurisdiction: The Direct Effects Clause

The Texas Trading court found subject matter jurisdiction under the

39. All the cases listed in note 33 supra involved the shipment of grain. 40. See Claim Against the Empire of Iran, 45 I.L.R. 57 (W. Ger. BVerfG 1963). 41. For instance, section 3 of the State Immunity Act of the United Kingdom defines "commercial transaction" as: (3)(a) any contract for the supply of goods or services; (b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such action or of any other financial obligation; and (c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority .... 48 HALSUaRv'S STATUTES at' 90. 42. See Claim Against the Empire of Iran, 45 I.L.R. at 80. 43. OPEC v. Organization of Petroleum Exporting Countries, 477 F. Supp. 553, 567 (C.D. Cal. 1979). 44. In re Rio Grande Transport, 516 F. Supp. 1155, 1162 (S.D.N.Y. 1981), decided subsequently to Texas Trading, takes the position that "regular course of commercial activity" should be construed broadly to give those aggrieved by the acts of a foreign sovereign access to American courts. 45. Thus, the finding in Texas Trading that Nigeria was engaged in commercial activity was based in part on the fact that other courts of the world had uniformly found Nige- ria's cement purchases to be a commercial activity. DEN. J. INT'L L. & POL'O VOL. 11:123 direct effects clause of section 1605(a)(2).'6 In so doing, the court construed the phrase "direct effect in the United States" as requiring two determinations: (1) whether there was a "direct effect" on the plaintiff and (2) whether the effect occurred "in the United States." The court found no guidance from Congress' suggestions that the clause be construed consistently with the principles of section 18 of the Restatement of Foreign Relations Law41 and that the clause might be intended as a long- arm statute.48 However, the court did rely on previous decisions, in particular Harris v. VAO Intourist, Moscow," Upton v. Empire of Iran,60 and Carey v. National Oil Corp."1 Harris" and Upton" together seem to establish that a direct effect is one which is substantial, foreseeable and immediate with no intervening elements. Carey stands for the principle that the breach of a contract is such a direct effect. Thus, in a corporate setting, Texas Trading found that a direct effect is a financial loss. Con- sequently, Nigeria's breaches of the cement contracts or breaches of the letters of credit were deemed by the court to be direct effects since the breaches resulted in financial losses to the four plaintiffs. The court found that failure to pay an American corporation triggers the statutory language "in the United States."' In interpreting this statutory language, the court examined the above-referenced cases and other state cases for guidelines. However, the search did not reveal a suitable

46. The direct effects clause provides: "A foreign state shall not be immune ... in any case ... in which the action is based . . . upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States. . . ." 28 U.S.C. § 1605(a)(2) (1976). 47. HousE REPORT, supra note 3, at 19. The Restatement provides: A state has jurisdiction to prescribe a rule of law attaching legal consequences to conduct that occurs outside its territory and causes an effect within its territory, if either

(b)(i) the conduct and its effects are constituent elements of activity to which the rule applies; (ii) the effect within the territory is substantial; (iii) it occurs as a direct and foreseeable result of the conduct outside the territory .... RESTATEMENT (SECOND) Op FOREIGN RELATIONS LAw § 18 (1965). 48. HousE REPORT, supra note 3, at 6611-12. 49. 481 F. Supp. 1056 (E.D.N.Y. 1979). 50. 459 F. Supp. 264 (D.D.C. 1978), af'd per curiam, 592 F.2d 673 (2d Cir. 1979). 51. 453 F. Supp. 1097 (S.D.N.Y. 1978), afl'd per curiam, 592 F.2d 673 (2d Cir. 1979). 52. Harris relies on the Restatement to arrive at this test for "direct effect." 481 F. Supp. at 1062-63. 53. Upton relies on an analogy of the Immunities Act to the District of Columbia's long-arm statute to arrive at its definition of "direct effect." 459 F. Supp. at 266. 54. The court did not make a ruling whether failure to pay a foreign corporation in the United States or to pay an American corporation abroad would be "in the United States." In re Rio Grande Transport, 516 F. Supp. 1155, 1163 (S.D.N.Y. 1981), decided subsequently to Texas Trading, held that an American corporation injured overseas incurs a direct effect in the United States if it suffers financial loss as a result of that injury. Rio Grande Trans- port lost considerable revenue when its ship sank after colliding with an Algerian ship on the high seas. 1981 DEVELOPMENTS standard. The court appeared to be concerned with the question of access to the courts for parties aggrieved by the commercial activities of a foreign state. It was the intent of Congresss that such access be provided to private litigants. As the "direct effect" and "in the United States" clauses are open to many interpretations, the ultimate question should be: "[Wias the effect sufficiently 'direct' and sufficiently 'in the United States' that Congress would have wanted an American court to hear the case?""" This line of reasoning leads to the conclusion that any borderline cases would be decided in favor of allowing litigation to proceed. Accord- ingly, the Texas Trading court asserted broader jurisdiction under the direct effects clause than any prior court.57 Since effects jurisdiction is not widely accepted in the world, such a broad assertion of effects jurisdiction over foreign states might be harmful to our foreign policy."

C. Article III Subject Matter Jurisdiction

Since each of the four cases is between a New York corporation and a foreign state, diversity of citizenship exists and article III of the Constitu- tion is satisfied69 Therefore, the federal courts properly have subject matter jurisdiction in these four cases.60

D. Statutory Personal Jurisdiction

Statutory personal jurisdiction under section 1330(b) exists if section 1330(a) is satisfied and if service of process has been made pursuant to section 1608. Both conditions have been met in these four cases, so statutory personal jurisdiction over Nigeria and Central Bank was found to be proper by the court.

55. HousE REPORT, supra note 3, at.6605-06. 56. Texas Trading, 647 F.2d at 313. 57. Prior to Texas Trading, the Decor district court had found jurisdiction to exist under the direct effects clause. The court in Maritime Int'l v. Republic of Guinea, 505 F. Supp. 141 (D.D.C. 1981), decided just shortly before Texas Trading, found jurisdiction as well, but Guinea had agreed to arbitration. This agreement to arbitration was found to be a waiver of jurisdiction by the Maritime court. 58. However, the minimum contacts requirements must also be satisfied before per. sonal jurisdiction can actually be asserted. This may limit the instances when jurisdiction will be found to exist. 59. U.S. CoNsT. art. III, § 2, cl.1 provides: "The judicial power shall extend to all cases in Law and Equity, arising under this Constitution, the Laws of the United States;. . . to controversies. . . between a State, or the citizens thereof, and foreign States .... " 60. In Verlinden B.V. v. Central Bank of Nigeria, 647 F.2d 320 (2d Cir. 1981), a case decided the same day as Texas Trading, a suit between an alien corporation and a foreign state was dismissed for lack of diversity. The Immunities Act was not considered by the court a "law" for the purposes of article III since it is simply a procedural, not a substantive statute. Although constitutional subject matter jurisdiction was not found, statutory subject matter jurisdiction was found to exist. DEN. J. INT'L L. & POL'Y VOL. 11:123

E. Due Process Analysis The Texas Trading court began by examining whether foreign states are "persons" within the meaning of the due process clause. The court found that prior case law indicates that foreign states are persons.6" Con- sequently, the minimum contacts standards of International Shoe" and its progeny must be met before jurisdiction can be exercised over a foreign state. The court then turned to the questions of "whose contacts?" and "with what?" The answer to the latter is the foreign state's contacts with the United States. This conclusion is reached because of the similarity of the service of process provision of the Immunities Actss and those of the antitrust and securities laws"4 which have been interpreted to allow jurisdiction to be exercised on the basis of contacts with the United States." Most other courts interpreting the Immunities Act and which have considered the "with what?" question have concluded that contacts any- where in the United States are jurisdictionally relevant, and have not limited the contacts to just those within the forum state." The answer to the "whose contacts?" question is the contacts of the defendant foreign state and those of its agents. The court's test for agency in this context is whether the agent "provides services beyond 'mere solicitation' and these services are sufficiently important to the foreign [state] that if it did not have a representative to perform them the [state's] own officials would undertake to perform substantially similar services." 67 Using this test, the Texas Trading court found Central Bank's activities attributable to Nigeria and Morgan's activities attributable to both since the entire payment mechanism would have collapsed without Morgan's performance. The attribution of an agent's contacts to the principal has been held appropriate by other courts looking at what contacts satisfy the minimum contacts standard under the Immunities Act." In order to assess how numerous the foreign state's contacts must be to satisfy the minimum contacts requirement, the court adopted the In-

61. See Thos. P. Gonzales Corp. v. Consejo Nacional de Produccion de Costa Rica, 614 F.2d 1247 (9th Cir. 1980); Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne de Navigation, 605 F.2d 648 (2d Cir. 1979); Purdy Co. v. Argen., 333 F.2d 95 (7th Cir. 1964); T.J. Stevenson & Co. v. 81,193 Bags of Wheat Flour, 399 F. Supp. 936 (S.D. Ala. 1975); and Rovin Sales Co. v. Socialist Republic of Rom., 403 F. Supp. 1298 (N.D. 111. 1975). 62. International Shoe v. Washington, 326 U.S. 310 (1945). 63. 28 U.S.C. § 1608 (1976). 64. See 15 U.S.C. §§ 21(0, 77(v) (1976). 65. See Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d Cir. 1975), cert. denied, 423 U.S. 1018 (1975); Mariash v. Morrill, 496 F.2d 1138 (2d Cir. 1974); Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1138 (2d Cir. 1972). 66. See Chicago Bridge & Iron, 506 F. Supp. at 988; East Europe, 467 F. Supp. at 390. 67. Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116, 121 (2d Cir. 1967), cert. denied, 390 U.S. 996 (1968). 68. See Outboard Marine Corp. v. Pezetel, 461 F. Supp. 384 (C.D. Del. 1978). 1981 DEVELOPMENTS ternational Shoe standard: "[Mlaintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' "" In addition, the line of cases after InternationalShoe interpreting the minimum contacts required to satisfy the due process clause were relied on.70 Using these precedents, the court established four tests to judge whether a foreign state's contacts with the United States are adequate to satisfy due process requirements: (1) to what extent did the defendants avail themselves of the privileges of American law;. (2) to what extent was litigation in the United States foreseeable to the defendants; (3) the inconvenience to the defendants of litigating in the United States; and (4) the counter- 71 vailing interest of the United States in hearing the suit. Applying these tests, the court found that Nigeria repeatedly and purposefully availed itself of the privileges of American law because of its extensive financial dealings with Morgan. New York law protected Nige- ria in each of its transactions. Furthermore, because of its extensive business dealings with Morgan, Nigeria could have foreseen litigating in New York. The frequent visits to New York by Central Bank officials and Ni- geria's worldwide business dealings negate any assertion by Nigeria that litigating in New York would be inconvenient. Finally, the Immunities Act was passed to provide access to the courts, and the United States has expressed a strong interest in providing a forum for such cases. Therefore, Nigeria's relation to the forum satisfied the due process clause requirements. Court interpretations of what are the proper minimum contacts standards under the Immunities Act have been varied. Some interpretations have relied on an InternationalShoe analysis, although only one other court besides the Texas Trading court has established a specific set of guidelines." Other courts have looked to long-arm statutes for guidance since section 1330(b) is patterned after the District of Columbia's long- arm statute.7 8 In addition, other courts analyze differently the contacts 4 required to satisfy clauses one, two and three of section 1605(a)(2).'

69. 326 U.S. at 316. 70. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); Kulko v. Superior Court of Cal., 436 U.S. 84 (1978); Hanson v. Denkla, 357 U.S. 235 (1958); and McGee v. International Life Insurance Co., 355 U.S. 220 (1957). 71. Texas Trading, 647 F.2d at 314. 72. Texas Trading affirms the Decor decision which did set up a three-factor test. De- cor, 49'7 F. Supp. at 1007. 73. Courts taking this approach rely on the District of Columbia's long-arm statute or their local long-arm statutes to set minimum contacts standards. The reliance on local long- arm statutes seems especially misplaced since Congress intended a uniform national stah- dard. Although reliance on the District of Columbia's long-arm statute is probably appropriate because of the legislative history, most courts using this standard have failed to include an additional constitutional contacts analysis. Application of constitutional standards is called for by the legislative history and, of course, constitutional standards should always be applied. 74. See East Europe Domestic Int'l Sales v. Terra, 467 F. Supp. 383 (S.D.N.Y. 1979) and Chicago Bridge &*Iron Co. v. Islamic Republic of Iran, 506 F. Supp. 981 (N.D. Ill. 1980). DEN. J. INT'L L. & POL'Y VOL. 11:134

Much of the confusion and diversity has resulted because these other courts do not separate their analyses of subject matter and personal jurisdiction questions. Since Texas Trading does analyze these questions separately, uniform minimum contacts standards can be applied in all cases. IV. CONCLUSION After an exhaustive analysis of jurisdiction under the commercial activity exception to the Immunities Act, the Texas Trading court developed a unique five-part test. This test separates the subject matter, personal jurisdiction, statutory, and constitutional questions, while providing standards for each part of the test. The Texas Trading test should provide needed uniformity in a substantial number of decisions involving the exercise of jurisdiction over foreign states. Thus, Texas Trading's elabo- ration of specific guidelines will give needed definition to the minimum contacts standard in the context of the Immunities Act. The court noted throughout the opinion that access to the courts is the determinative factor in a decision to exercise jurisdiction. This liberal attitude has been embraced by a New York federal district court in In re Rio Grande Transport.5 The Rio Grande Transport court repeatedly emphasized the concern of Congress that those aggrieved by the commercial acts of a foreign sovereign should be given a forum. Thus, the Texas Trading five-part test seems destined to lead to a uniform but broad exercise of jurisdiction over foreign sovereigns by the New York federal courts. Wannell Baird

EMS Currency Rates Realigned

The European Monetary System (EMS) is the European Commu- nity's mechanism for linking the currencies of West Germany, France, It- aly, Ireland, Denmark, Belgium, Luxembourg, and the Netherlands in a joint float against the U.S. dollar and other major currencies.' By promoting stable exchange rates, the EMS seeks to integrate and harmonize the

75. In re Rio Grande Transport, 516 F. Supp. 1155 (S.D.N.Y. 1981).

EMS Currency Rates Realigned

75. In re Rio Grande Transport, 516 F. Supp. 1155 (S.D.N.Y. 1981).

1. For an in-depth discussion of the European Monetary System, see Development, The European Monetary System and the European Currency Unit, 10 DEN. J. INT'L L. & PoL'v 175 (1980). See also Rey, The European Monetary System, 17 CoMm. MKT. L. Rav. 7 (1980). 1981 DEVELOPMENTS economies of member states. On October 4, 1981, the values of the West German mark and the Dutch guilder were boosted by 5.5% against their European partners, and the value of the French franc and the Italian lira were cut by 3%. Aside from two minor adjustments in the exchange rates in September and November 1979,s there have been no other events to mar the operation of the EMS. This re-evaluation of member currencies was the most radical shift in the EMS's three-year history. Some analysists had expected a major adjustment to occur on the weekend of August 15, 1981, with the big change resting on the French franc.3 However, realignments have never occurred when the market was expecting them, and when they have finally happened they have always been less significant than had been anticipated. The revaluation was basically the result of widely disparate economic conditions of the EMS members. Inflation rates during the period before revaluation, for example, 4 ranged from 20% in Italy to 15% in France and 6% in Germany. Many observers noted that severe pressures were building within the EMS as a result of divergent French and German economic policies. Ger- many attempted to restrain monetary expansion to the lower end of its four to seven percent target range. The Socialist government of Frangois Mitterand, on the other hand, moved in the opposite direction. Focusing on reducing unemployment, the French government increased the minimum wage, reduced the work week, and embarked on a program to create 210,000 public sector jobs. It also attempted to bolster the franc with record high interest rates. The French franc fell 31% against the dollar from July 1980 to Au- gust 1981. The French increased interest rates to 22%, and spent about $12 billion of their reserves to prop up their sagging franc against the other EMS currencies and the dollar as capital fled the country. 6 In the week ending September 24, 1981, for example, the French central bank spent nearly $2 billion to support the franc.' The Germans also inter- vened with more than $6 billion in foreign exchange market purchases.7 Under the joint float arrangement, each of the currencies in the EMS

2. The finance ministers of the EMS raised the value of the Deutsche mark two percent against six other EMS currencies and five percent against the Danish krone in the first realignment of the six-month-old EMS on September 24, 1979. Wall St. J., Sept. 24, 1979, at 4, col. 1. The second realignment of the EMS currencies took place on November 30, 1979, when the Danish government devalued its krone by five percent against the other currencies of the EMS. BULL. EUR. COMMUNITY (CCH), Nov. 1979, at 30. 3. Bus. WK., Aug. 10, 1981, at 80. 4. N.Y. Times, Oct. 5, 1981 at 1, col. 1. 5. Bus. WK., Aug. 10, 1981, at 80. When the market rate for any currency pair reaches its predetermined limit, both central banks have a legal obligation to intervene to keep their currencies within the band. Res. No. 32/1978, Dec. 8, 1978, of the European Council, [ 1978), 3 COMMON MKT. REP. (CCH) 1 10,095. 6. N.Y. Times, Oct. 5, 1981, at 1, col. 1. 7. Bus. WK., Aug. 10, 1981, at 80. DEN. J. INT'L L. & POL'Y VOL. 11:134

is given a fixed rate against each other's currency and is allowed to float 2.25% above or below that rate. A few days before the realignment, the French franc had fallen below its band against the German mark.6 France did not want to devalue its currency, which would have been a politically embarrassing event for the new Socialist government. Some Common Market specialists indicated they welcomed the realignment, but others were disappointed that the franc was not devalued further.' The continued credibility of the European Monetary System depends on the speed and smoothness with which the political decisions to realign can be taken. The London Times was highly critical of the realignment, which came after eight hours of intense discussions: The ministers and their officials met today under a deadline imposed by world financial markets. Failure to have produced a political decision in time for the opening of the Tokyo foreign exchange market at one o'clock Brussels time on Monday morning could have resulted in a day of chaos on international money markets. 0 Furthermore, Belgium successfully resisted pressures to devalue its franc-long the weakest EMS currency-on the ground that its interim government, holding power until elections in November 1981, did not have the authority to approve such a step.11 But the failure to agree on a devaluation of the Belgian franc was seen by many as a grave weakness in the new pattern of exchange rates that would sooner or later result in speculative currency flows upsetting the system.1" Some analysts predict that the EMS will come under renewed pressure, possibly within six months."' Others feel that another realignment in 1982 looks "distinctly possible."" Nevertheless, most analysts agree that the EMS has fulfilled its basic aim of helping to steady exchange rate fluctuations, especially during a period marked by dollar weaknesses and strengths as well as wide swings in interest rates.'8 The changes should make French and Italian goods

8. Wall St. J., Oct. 5, 1981, at 5, col. 1. 9. "That decision was more political than financial," one analyist contended. Wall St. J., Oct. 6, 1981, at 31, col. 1. 10. London Times, Oct. 5, 1981, at 1, col. 6. 11. Wall St. J., Oct 5, 1981, at 5, col. 1. 12. London Times, Oct. 6, 1981, at 17, col. 6. Indeed, on February 21, 1982, the Belgian franc was devalued 8.5%, which was its first devaluation since 1949. THE EcoNomIST, Feb. 27, 1982, at 61. The Danish krone was also devalued 3%. Id. 13. Id. at 19, col. 3. 14. THE EcoNoMIST, Oct. 18, 1981, at 70. 15. "The European Monetary System has emerged remarkably well from Ithel realignment of its major currencies .... The EMS has thus survived a potential source of major disturbance in the foreign exchange markets." London Times, Oct. 6, 1981, at 13, col. 1. The EMS might be increasing its membership and responsibilities as there has been specu- lation that the United Kingdom and Greece may join the EMS. Although the United King- dom decided not to join the EMS as a full member, it forms part of the European Currency Unit (ECU), has transferred its share of reserves to the European Monetary Fund, and has pledged to maintain a "stable" exchange rate. THE EcoNomisr, Mar. 17, 1979, at 74. Greece 1981 DEVELOPMENTS cheaper in the six other countries of the EMS as well as in the United States. By making exports from France and Italy more competitive while simultaneously decreasing their imports, the realignment could help these countries reduce large trade deficits and restore international confidence in their currencies. These changes should also enable France and Italy to start reducing the high interest rates they were forced to adopt to prevent the flight of capital to other countries. In addition, inflationary tendencies in West Germany and the Netherlands should be reduced as a result, while the French franc should gain in strength. Finally, the realignment will discourage investment in the U.S. dollar-a very favorable haven due to high U.S. interest rates-and relieve the criticism levelled at U.S. fiscal policy. Hopefully, realignment may also lessen the counterattacks launched by Washington in defense of its policies. J.H.W.Jr.

Rex v. Cia. Pervana De Vapores, S.A.: Sovereign Immunity And The Constitutional Right To Jury Trial

Three circuit courts of appeal' recently considered the seventh amendment right' to jury trial in conjunction with actions brought under the Foreign Sovereign Immunities Act of 1976 (FSIA).' Specifically, the courts addressed whether all actions brought pursuant to the FSIA must be tried to the court without a jury, and whether the Act is the sole basis for federal subject matter jurisdiction in civil actions against agencies or instrumentalities of foreign sovereigns. More importantly, the courts considered whether, if the answers to both of the above questions are in the affirmative, the FSIA is consistent with the seventh amendment guaran- joined the European Community on January 1, 1981, but has not linked its drachma to the system even though it has signed the basic EMS agreements. Wall St. J., Mar. 16, 1981, at 26, col. 2.

Rex v. Cia. Pervana De Vapores, S.A.: Sovereign Immunity And The Constitutional Right To Jury Trial

1. See Williams v. Shipping Corp. of India, 653 F.2d 875 (4th Cir. 1981), and Ruggerio v. Compania Pervana De Vapores "Inca Capac Yupanqui," 639 F.2d 872 (2d Cir. 1981), wherein the courts affirmed district court orders striking jury demands on grounds consistent with those of Rex v. Cia. Pervana De Vapores, S.A., 660 F.2d 61 (3d Cir. 1981). 2. The seventh amendment states in relevant part: "In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved. ." U.S. CoNasT. amend. VII. ' 3. 28 U.S.C. § 1330(a) (1976). DEN. J. INT'L L. & POL'Y VOL. 11:137 tee of civil jury trial. Rex v. Cia. Pervana De Vapores, S.A.," the most recent of the three cases, involved Calvin Rex, a longshoreman who was injured while un- loading cargo from a ship of Compania Pervana De Vapores, S.A., a Peru- vian corporation whose stock is wholly owned by the government of Peru. Calvin Rex filed suit for damages under section 5(b) of the Longshore- men's and Harbor Workers' Compensation ActG alleging federal subject matter jurisdiction on the grounds of diversity of citizenship, 6 a federal question,7 and an action against a foreign sovereign. 8 A request for a jury trial was included in the claim for relief. The district court granting the demand for a jury trial' was reversed on interlocutory appeal by the Third Circuit on grounds of congressional intent and interpretation of the seventh amendment right to jury trial. In so doing, the Third Circuit agreed with the conclusions reached by the Second and Fourth Circuits in Ruggerio v. Compania Pervana De Vapores "Inca Capac Yupanqui" and Williams v. Shipping Corp. of India,0 but arrived at its decision by a slightly different route. The courts in Ruggerio and Williams, citing Supreme Court precedent,"' held the seventh amendment applies only to defendants who could be sued at common law in 1791. Because the commercial vessels of foreign states were immune from suit in 1791, actions now brought pursuant to FSIA would not be within the seventh amendment. The Rex court, in deciding whether Rex's claim was a suit at common law, did not accept this static approach to such a "vital constitutional guarantee." 2 Instead, the court noted that beginning with an 1830 decision, 8 the guarantee has been held applicable to almost any suit that falls within the federal court's jurisdiction over suits at law as opposed to suits in equity or admiralty. Since it cannot be maintained that under the common law in 1791 jury trial was a matter of right for persons asserting claims against the sovereign," there is now no generally applicable jury trial right that at- taches when the United States consents to suit. The accepted principles of sovereign immunity require that a jury trial be clearly provided in the legislation creating the cause of action. Therefore, the relevant inquiry as focused upon by the Third Circuit is whether the action is in the nature

4. 660 F.2d 61 (3d Cir. 1981). 5. 33 U.S.C. § 905(b) (1972). 6. 28 U.S.C. § 1332 (1976). 7. 28 U.S.C. § 1331 (1976). 8. Id. § 1331(a). 9. Rex v. Cia. Pervana De Vapores, S.A., 493 F. Supp. 459 (E.D. Pa. 1981). 10. See Ruggerio, 639 F.2d at 872 (2d Cir. 1981), and Williams, 653 F.2d at 875 (4th Cir. 1981). 11. See McElrath v. United States, 102 U.S. 426 (1880), and Parsons v. Bedford, 28 U.S. (3 Pet.) 433 (1830). 12. 660 F.2d at 66. 13. Parsons v. Bedford, 28 U.S. (3 Pet.) at 446-47. 14. Galloway v. United States, 319 U.S. 372 (1943). 1981 DEVELOPMENTS of a legal remedy provided by statute similar to a suit at common law.", History conclusively demonstrates that actions against foreign sovereigns did not exist at common law, but have only existed exclusively at the "sufferance of the United States Department of State."' In 1976, Congress complied with the recommendations of the Departments of State and Justice to legislate the restrictive theory of sovereign immunity by enacting the FSIA. In doing so, Congress expressed the intent that foreign sovereigns not be subject to the jury system."? Congress has specifically refused to subject the United States to trial by jury.' 8 The court concluded that by such specific legislation and express intent, the cause of action under FSIA was not in the nature of a legal remedy at common law, and significantly, that no jury should intervene. Such denial of jury trial would not violate the Constitution since no suit at common law" was being litigated. Dissenting Judge Soviter agreed that the statute must provide the sole basis of federal jurisdiction in actions against foreign sovereigns and that the action must be in the nature of a suit at common law. However, the dissent would look to the nature of the defendant rather than to the nature of the plaintiff's claim or rights to determine the existence of a suit at common law. Specifically, the FSIA should be considered unconstitutional "insofar as it denies plaintiff a jury trial merely because the defendant is a corporation in which a foreign state owns a controlling interest."a0e Despite the strength and logic of the dissenting opinion in Rex, the rule would now appear to be clearly delineated by at least three circuits. The significance of the Williams, Ruggerio, and Rex decisions should not be seen as a cutting back on the restrictive theory of sovereign immunity,2 but rather as an expression of the intent to preserve the basic concept of sovereign immunity and, more importantly, the discretionary determinations of the executive branch of the government as it functions in the international legal system. C.J.

15. 660 F.2d at 67. 16. Id. at 68. 17. See Ruggerio, 639 F.2d at 880 n.12; Aldisert, The Nature of the Judicial Process: Revisted, 49 U. CIN. L. REv. 1, 8-16 (1980). 18. 28 U.S.C. §§ 1346(a)(2), 2402 (1976). 19. 660 F.2d at 69. 20. Id. at 70. 21. See the Tate Letter, reprinted in Alfred Dunhill of London, Inc. v. Republic of China, 425 U.S. 682, 711 (1976).

BOOK REVIEWS

International Ocean Shipping: Current Concepts and Principles Reviewed by R.O. Goss*

ABRAHAMSSON, B.J., INTERNATIONAL OCEAN SHIPPING: CURRENT CONCE'rs AND PRINCIPLES; Westview Press, Boulder, CO (1980); $27.50 (cloth); ISBN 0-89158- 875-2, LC 79-26674; xv, 232 p.; footnotes, bibliography, tables, diagrams, index, appendices. Those with serious interests in maritime affairs have long been ill- served by authors. Some have produced mechanical textbooks for mechanically passing rather boring examinations, and others have been, essentially, either apologists for whatever the current situation happened to be or protagonists of a particular viewpoint. Few books have dealt with basic principles. Despite such exceptions as Dr. O' Loughlin's book,' there has long been a gap for an introductory and basic textbook which, while describing the underlying principles, does not attempt to pass judgment. Professor Abrahamsson has now filled this gap. He commences with an overview of merchant shipping and quickly introduces the reader to basic terms and concepts such as dry cargo ship types, containers and the "mini-bridge" in the course of a few pages. The reader is then equipped for later chapters which sensibly move from the general to the particular. Next there is a chapter on "Transportation Eco- nomics" in which Abrahamsson is not afraid to discuss other transportation modes and to note the economic advantages and disadvantages of the different modes. In chapter three, the discussion of elasticity of demand is sensibly brief and avoids algebra. However, the following discussion of coordina-

*Richard Goss is a British maritime economist who spent several years at sea and became Master Mariner before graduating in economics at King's College, Cambridge. He then spent some years working in the head office of the New Zealand Shipping Co., Ltd., in London and, in 1963, became an Economic Consultant on shipping, shipbuilding and ports to successive departments of the British Government. He was Economic Advisor to Lord Rochdale's Committee of Inquiry into Shipping. Subsequently, as Senior Economic Advisor and Under Secretary, he had responsibilities for wider economic and statistical matters, e.g., civil aviation, airports and wholesale prices. He left government service in 1980 and now teaches at the University of Wales Institute of Science and Technology at Cardiff. 1. C. O'LOUGHLIN, THE EcONOMICS OP SEA TRANSPORT (1967). DEN. J. INT'L L. & POL'Y VOL. 11:141 tion2 leads to the surprising statement that: "We may, in the not too dis- tant future, see the development of 'transportation systems companies' rather than independent, one-link operators." If this refers to physical operators of international services, then any gravity model" renders it improbable; and, if this refers to organisers, then we have had them in the form of through-transport container services for many years. The author also presents in chapter three the hoary old fallacy that the ideal cargo should utilize both weight and volume capacities,5 whereas observation shows that this is frequently not done (for instance by ore carriers), and that there is nothing wrong with disregarding this advice. There is nothing nonoptimal about ore shipments. Freight rates have more effect than suggested here on modal choice, and, if there were a cheaper way to transport ore, that way would be employed. Even though this information might have been included in the earlier overview chapter, the next chapter, entitled "The Elements of Ocean Shipping," discusses the design of ships, the financing of their building, and the need to analyze demand for types of ships versus their cost to build. This discussion is followed by a rather complex diagram s showing the relationship between type of carriage contract, types of service, and ships by type of cargo. This diagram is interesting and might be advanta- geously expanded, as could the discussion of it. However, the author finally admits that there are so many overlaps that the diagram can be no more than a useful frame of reference. In rapid succession sections on technological changes in ships and in ports are next presented. The use of shipboard computers and hyperbolic navigation systems (but not SATNAV) as well as classification agencies are discussed.7 This is a rather curious selection of topics. The next chapter is called "Functional Types of Ships," but it actually has separate sections on machinery, hulls, and cargo gear, as well as a discussion of ship types. In the next chapter, "Types of Transport Con- tracts," the author discusses bills of lading, letters of credit, the Carriage of Goods by Sea Act,8 and charter parties.' There is, however, only the

2. "Coordination" refers to the coordination of supply with demand. "Supply" is the supply of the various transportation modes from origin to destination. "Demand" is the demand for transportation of the goods from the origin to the destination. B.J. ABRAHAM- SSON, INTERNATIONAL OCEAN SHIPPING: CURRENT CONCEPTS AND PRINCIPLES 30 (1980). 3. Id. 4. The term "gravity model" is used to describe a theoretical construct of transportation movements between different points. The model assumes that the volume of traffic between each pair of points is likely to vary inversely with the distance between the two points. 5. B.J. ABRAHAMS5ON, supra note 2, at 42. 6. Id. at 55. 7. Classification agencies issue rules and standards for materials, construction, and maintenance of ships. Id. at 61. 8. Carriage of Goods by Sea Act, 1924, 14 & 15 Geo. 5, ch. 22. The Act passed in Eng- land (and similar ones passed in the United States and Canada) incorporates the Hague Rules relating to bills of lading. The Hague Rules have three objectives: to standardize bills 1981 BOOK REVIEWS briefest introduction to each subject and no indications of the extent to which litigation occurs in these areas. "Marine Insurance" is the next chapter. Again, it is largely descriptive but contains a welcome passage on the state of the insurance market. Despite an earlier chapter entitled "Freight Rates and Tariffs," there is also a chapter on "Rate Determination: The Tramp and Liner Mar- kets." No reason is given for having two separate chapters. The author explains derived demand, the relationship between gross national products and world trade, and the significance of cargo volume, distance, political and natural factors on freight rates. All this is covered briefly and, unfortunately, without much analysis. Certainly, the object seems to be to introduce the reader to these subjects rather than to train him how to produce market reports. The history of the attempt to fix freight rates for sailing ships in 1905 and the history of the more successful attempt to put some floor under the market in the 1930's are interestingly related. Here, as elsewhere in this volume, there is little discussion of where the public interest may lie.10 Liner conferences" are next described, although the reader will already have read the detailed discussion of liner tariffs noted above. Next, there is a short chapter on "Flags of Registry." Flags of convenience" and the potential effects of such open registry on future shipping policies are the major topics of the chapter. Also mentioned are UNCTAD's s efforts to help developing countries increase their tonnage.'4 Finally, there is a chapter describing international organizations. The book as a whole thus does not move in a very systematic way from topic to topic. It would have benefitted greatly from a thorough re- ordering of the material and perhaps a second edition will provide this. Such didactic criticisms aside, the book gives a very fair, if necessarily brief, analysis of current shipping problems and procedures. There are few concessions to the student wishing to be spoon-fed. Generally, this is

of lading, to set rules to expedite claims settlement, and to standardize rights and obligations of both shippers and carriers. B.J. ABRAHAMSON, aupra note 2, at 88. 9. "Charter parties" are the contracts used in tramp shipping. B.J. ABRAHAMSON, supra note 2, at 91. 10. For instance, a worthwhile discussion would have included topics such as what are reasonable profits and whether rates should be fixed or are best determined by market conditions. 11. "Liner conferences" are cartels in the liner trades. Members meet to set prices and to divide up markets. B.J. ABRAHAMSSON, supra note 2, at 20. 12. Flags of convenience are available to anyone satisfying minimal conditions and are sold to foreign shipowners wishing to escape the fiscal and other consequences of registration under their own flag. They offer shipowners advantages in order to attract tonnage. Id. at 132. 13. UNCTAD is the acronym for United Nations Conference on Trade and Development. 14. The aim of UNCTAD was for less developed countries to account for 10% of world deadweight tonnage by 1980. B.J. ABRAHAMSON, supra note 2, at 131. DEN. J. INT'L L. & POL'YV VOL. 11:141 welcome." Each chapter is followed by useful references: There is an index (whose compiler is keener on the concrete than on the abstract), appendices providing the texts of several important conventions, and an extensive bibliography. This is a good basic introduction for those students in interdisciplinary courses who can supplement the book with other sources.

15. However, the diagrams on page.34 show MC-AR=MR without any explanation at all, which is disconcerting for anyone without economic training and especially if studying alone, e.g., at sea. Moreover, all diagrams are used solely in the context of losses and the decision to close down. The concept of the long period duly appears elsewhere and there is no demonstration of long-run equilibrium, of P = AR being greater than MR-MC, nor, save by the surplus and deficit concept of cross-subsidization, of the equilbria of price discrimination through the lateral summation of marginal revenue curves. Instead we have a rather old-fashioned and inconclusive discussion of value-of-service versus cost-of-service which contrasts uneasily with the level of knowledge previously assumed. The reversal of the economist's conventional approach has been used on page 34. A Study of the Philosophy of International Law As Seen in Works of Latin American Writers Reviewed by Leonard v.B. Sutton*

JACOBINI, H.B., A STUDY OF THB PHILOSOPHY OF INTERNATIONAL LAW AS SEEN IN WORKS oP LATIN AMERICAN WRITERS; Hyperion Press, Westport, CT (1979); $18.50 (cloth); ISBN 0-88355-849-1, LC 78-20471; viii, 158 p.; footnotes, bibliography, index. Reprint of the 1954 edition published by Nijhoff, The Hague. Professor Jacobini in this worthwhile small volume of 158 pages states what he has attempted to do, and what this reviewer believes he has achieved with precision: The views on the philosophy of international law of most of the Latin American writers of the nineteenth century, and of selected representative writers of the twentieth century, have been outlined against the background of a general survey of the philosophy of international law since the fifteenth century, and in the light of an explanation of contemporary interest in this general topic. These writers were classified into the three categories of positivist, naturalist,and eclectic, the attempt having been made to give as exact a statement as possible of the position of each on the problem of the nature and sources of international law. (Emphasis added.)' Although he divides writers and thinkers in this field into positivist, naturalist and eclectic, the author recognizes that the terms have had varied meanings over the past five hundred years. He states, for example, that Grotius has been classified as an eclectic. Yet, Lauterpacht, "who is considered to be a naturalistic thinker, [is) really much more positivistic than Grotius"' by today's standards. What Professor Jacobini stresses is that the "ethos of the age in which the particular author lived. . . [has to be] . . . kept in mind"'s in analyzing his writings. The author traces how theories of international law have evolved from the naturalisticconcept of a supreme being decreeing what is right and wrong to the strict positivistic position that international law derives only from treaties, conventions, customs and general legal principles. He then demonstrates how in the nineteenth and twentieth centuries the

*Leonard v.B. Sutton is former Chief Justice of the Colorado Supreme Court, former Chairman of the Foreign Claim's Settlement Commission of the United States, and a well- known lecturer and writer on judicial and international law subjects. 1. H.B. JACOBINI, A STUDY OF THE PHILOSOPHY OP INTERNATIONAL LAW AS SEE IN WORKS OF LATIN AMEICAN Wsrrims 137 (Hyperion reprint ed. 1979). 2. Id. 3. Id. DEN. J. INT'L L. & POL'Y VOL. 11:145 idea became more widely adopted that treaties, conventions, and even many national laws are a combination of both naturalistic and positivistic concepts and, thus, are eclectic. Many writers are cited who point out that the natural law concept of justice has ahd does permeate international law4 as well as national and local laws.' The point is made that if a law is not "just," it not only will be rejected by humanity, but it will, in the end, be partially or entirely unenforceable. Some authors cited believe that treaties merely codify what is "right and just" from natural law. For example, Jorge Americano, a prominent Brazilian scholar, is quoted as stating: "Law. . . is a system of guarantees based on principles of justice."' Professor Jacobini draws one conclusion from his research: [Tlhat facts, while of potential juridical value, only assume actual legal significance by virtue of recognition of their possession of that legal significance. This recognition is, of course, an intellectual process by which man adjusts his legal rules to conform with his percep- tion [at that period of history] of truth. (Emphasis added.)7 Scholars who are classified as eclectic also came to the same conclusion as Professor Jacobini. For example, the Peruvian professor D. Ra- mon Riberyo is quoted as saying that international law "is the aggregate of rational rules and of positive institutions which govern relations of nations among themselves in peace and war and which have for their object the resolving of conflicts." (Emphasis omitted.) Hildebrando Pompeo Pinto Accioly, a prominent Brazilian diplomat and writer, concludes that "[i]nternational law is valid because men have conscience . . . ." He also recognized, however, as do all the authors of his time, that the general principles of applied international law arise out of "the general principles of law, customs, and treaties and conventions.""0 It is noted that Accioly, however, did not recognize all the sources -of international law which article 38 of the Statute of the Interna- tional Court of Justice acknowledges."

4. Id. at 90-104. For instance, the eclectic writers of the twentieth century espoused this idea. SA Vianna stated: "The reason or basis of... linternational law] is that the human race, although divided into various peoples ... always has some unity ... determined by the natural precept of mutual love and mercy . I..."Id. at 92, citing M.A. DE SouZA SA VIANNA, ELEMENTOS DE DIREITO INTERNAC|ONAL 23 (1908). 5. For further reading on the philosophy of natural law, see Schneider, Books and Arti- cles on Natural Law and Related Areas, 14 AM. J. Jumis. 159 (1969). This is a bibliography of books and articles published on this subject by contemporary European writers. 6. H.B. JAcosINI, supra note 1, at 113. 7. Id. at 135. 8. Id. at 90. Jacobini is quoting from 1 D.R. RIBERYo, DERECHO ITEMRNACIONAL PUsLICO 7 (1901-1905). 9. Id. at 102. Jacobini is quoting from 1 H. ACCIOLY, TRATADO DE DERECHO INTERNA- CIONAL PUBLICO 14 (1945-1946). 10. Id. 11. Article 38 provides that the International Court of Justice shall decide disputes by 1981 BOOK REVIEWS

It is interesting to note that this book contains no direct reference to the distinction in Anglo-American law of acts or concepts that are mala in se compared with those that are mala prohibita.It is suggested by this reviewer that relating mala in se to natural law would help clarify the domain of mala prohibita. Some reference is made in the book to the trend of the nineteenth and twentieth centuries of recognizing individuals and even rebel groups, not just states and public organizations, as subjects of international law. Major expansion of this concept since World War II is evidenced by the creation of official bodies such as the European Commission on Human Rights and the Latin American Court on Human Rights. One cannot fault the author, however, for not emphasizing that trend more fully since his study was first published in 1954, and much has transpired in that field since then. Today the idea of individual human rights and freedoms that was forceably pursued in the French and American Revolutions and partially enumerated in the Atlantic Charter"' is a growing wave of the future. It is a wave which may inundate old concepts and ideas of sovereignty. Furthermore, the concept of individual human rights reflects what large numbers of the world's citizens think the future goals of mankind are or should be. The book's final chapter discusses the existence vel non of American international law. It is pointed out that this is a concept personified by the Monroe Doctrine and which arose because of the distinctive problems, geography and cultures of the countries of the Western Hemi- sphere. Thus, although American international law emphasizes regional solidarity, it really is only a regional application of worldwide international law. Jacobini gives an adequate and interesting discussion of this idea, its history, and its proponents and opponents. Finally, the book contains a comprehensive bibliography as well as an adequate index. These two listings provide easy access to places in the book where the works of the myriad authors and the documents are discussed. The scope of the author's cited and quoted writers is impressive. Lawyers, jurists and professors from nearly all of Latin America are included, and the works of several centuries are examined. However, Pro- fessor Jacobini's ability to summarize their views succinctly and to draw conclusions from them is equally impressive. Reading the study should make English-speaking people cognizant of the fact that there are others in far away places who are perhaps even more erudite and thoughtful about the origins of mankind and where it is going than we fancy our- applying international conventions, international custom, general principles of law recognized by civilized nations, and judicial decisions and teachings of the most highly qualified publicists of the various nations. I.C.J. STAT. art. 38. 12. Atlantic Charter, Aug. 14, 1941, United States-United Kingdom, 55 Stat. 1603, E.A.S. No. 236. This agreement sets forth the goals tf the United States and the United Kingdom for the future of the world. 148 DEN. J. INT'L L. & POL'Y VOL. 11:145 selves to be. This study points out that the law is not static and that the concept of justice is ever changing. Both will continue to evolve because of man's unique nature, for man is the only creature with a conscience and the only creature able to rationalize, to think, and to dream of.a better world. BOOK NOTES

BOCKSTIEGEL, K-H., SrrLEMENT OF SPACE LAW DisPUms: THE PRE- SENT STATE OF THE LAW AND PERSPECTIVES OP FURTHER DEVELOPMENT (vol. 1); Carl Heymanns Verlag, Publisher, Cologne, West Germany (1980); available in the United States from Fred Rothman & Co., Littleton, CO 80213; $84.50 (paper); ISBN 3-452-18794-2; available in German and French; ix, 415 p.; footnotes, list of participants, bibliography, texts of documents and relevant material, references in German and French. Pro- ceedings of an International Colloquium, held in Munich, September 13- 14, 1979, organized by the Institute of Air and Space Law, University of Cologne. This book documents an international colloquium held in Munich, West Germany entitled Space Law Disputes and contains the Welcome Address and Introduction to the Topic, the Concluding Remarks given by Karl-Heinz Bckstiegel, and the texts of sixteen speeches made at the colloquium by experts from different parts of the world. Each presentation of a particular topic is accompanied by the transcript of the discussion which followed the presentation. The purpose of the colloquium and the resulting publication is to serve as a starting point for future research and for the preparation of international agreements in recognition of the growing importance of space law disputes. The colloquium consisted of four sessions. The topics of the four sessions were: (1) Dispute Settlement in Public International Law; (2) Rules for Dispute Settlement in Present Space Law; (3) Rules and Experience in Comparable Fields of the Law; and (4) Perspectives for Further Devel- opment of Space Law. An overview of each topic was presented initially, and then each topic was further explored by examining specific examples and practical applications. The colloquium was designed as a workshop, not as a formal lecture. This format was used to facilitate an exchange of ideas among the participants. Consistently, the aim of the conference was not to draw conclusions and formulate resolutions but rather to define the judicial methods of dispute settlement in space law so that states may draw upon them if they so wish. The collection of treaties and other materials relevant to space law dispute settlement is quite extensive and should be a very valuable source of information for those interested in the topic. Professor Dr. Karl-Heinz Bckstiegel is Director of the Institute of Air and Space Law and holds the Chair of International Business Law, DEN. J. INT'L L. & POL'Y VOL. 11:149

University of Cologne.

BROWNLIE, I., PRINCIPLES OF PUBLIC INTERNATIONAL LAW (3d ed.); Ox- ford University Press, Oxford, England (1979); available in the United States from Oxford University Press, New York, NY; $47.00 (cloth); ISBN 0-19-876066-3, LC 79-41139; 2d ed. available in Russian; xxxviii, 743 p.; list of abbreviations, table of cases, glossary, index. The book is organized into twelve parts with a total of thirty-one chapters. The purpose of the book, as stated by the author, is to provide a reasonably comprehensive description of the law of peace by examining the modern practices of states, the practices of organizations of states, and the decisions of international and municipal courts. Parts I-III thoroughly cover the sources of international law, the relationship of municipal to international law, personality, recognition, and territorial sovereignty (including the creation and transfer of territorial sovereignty as well as international procedures and legal regimes). Part IV describes the law of the sea including the law of the territorial sea, the submarine areas, and the high seas. Part V discusses the use of resources. The topics examined include: economic aid, access to resources, conservation, restrictive practices, outer space, international riv- ers, straits, and the seabed area. Part VI covers state jurisdiction. Topics discussed include the sovereignty ind equality of states, jurisdictional competence, privileges and immunities of foreign states, diplomatic and consular relations, and reser- vations from territorial sovereignty (e.g. territorial privileges by concession and external imposition of government functions without the consent of the sovereign). Part VII examines other rules of attribution such as those concerning nationality, corporations, aircraft, and space vehicles. Part VIII covers the responsibility of states, the admissibility of state claims, and the concept of jus cogens. Part IX discusses the protections for individuals and groups that exist in international law in cases of injury to the person or property of aliens. Also discussed are the international principles and recent developments in the area of human rights and self-determination. Part X covers international transactions. The law of treaties, concepts of agency and representations, and techniques of supervision and protection are presented. Part XI describes the transmission of rights and duties, particularly with respect to state succession. Finally, part XII closes with a discussion of the legal personality, relations with member states, law-making and other aspects of international organizations and the judicial settlement of international disputes. 1981 BOOK NoTEs

BRYANT, R.C., MONEY AND MONETARY POLICY IN INTERDEPENDENT NA- TIONS; The Brookings Institution, 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036 (1980); ISBN 0-8157-1130-1; xxii, 584 p; footnotes, appendices, selected bibliography, name index, subject index, tables, and figures. Foreword by Bruce K. Maclaury, President of the Brookings Institution. This book is a treatise on the theory of national economic policy with special emphasis on the decisions of central banks about national monetary policy. Believing that the causes and consequences of the turbulent changes in economic conditions since the 1930's have been poorly understood, the book was written to help policymakers in national governments improve their conduct of economic policy, in particular monetary policy. The analysis and guidelines developed in the book grew out of today's "best-practice" economic theory. The guidelines are not a detailed man- ual that can be straightforwardly applied to specific policy issues for specific nations. Rather, the guidelines constitute a solid foundation on which to anchor analysis of specific policy decisions. The book's theme is developed in five parts. Following an introductory section designed to illuminate the main themes and basic concepts of the topic, parts I and II explore the concepts of monetary aggregates in closed and open economies by defining money and the "correct" definition of national money, discussing money as the intermediate target of monetary policy, and explaining the rudiments of monetary theory. Part III explores the issue of interdependence and its impact on national economic policy: discussing the degrees of autonomy, the controllability of interdependence, and the impact of interdependence on national welfare. Parts IV and V examine the conduct of monetary policy by closed and open economies. Model and strategic choices in monetary strategies including the politics of monetary policy, instrument choices and instrument variations, fixed versus flexible exchange rates, and the issue of international cooperation, are discussed. A concluding chapter analyzes guidelines for the conduct of national monetary policy. Ralph C. Bryant is Senior Fellow in the Brookings Economic Studies Program. Before joining Brookings in 1976, he served on the staff of the Board of Governors of the Federal Reserve System as Director of the Di- vision of International Finance and Associate Economist of the Federal Open Market Committee.

CAMPBELL, D. (editor), INTERNATIONAL HANDBOOK ON COMPARATIVE BuSINEss LAW; Kluwer Law and Taxation Publishers, Stromarkt 8, T.O.P. 23, Deventer, The Netherlands, T74411 (1979); available in the United DEN. J. INT'L L. & POL'VY VOL. 11:149

States from Kluwer Law and Taxation, 160 Old Derby Street, Hingham, MA 02043; ISBN 90-268-1074-1; 212 p.; footnotes and appendices. This handbook was written to offer a "core" sample of the legal systems of Belgium, Denmark, England, France, the Federal Republic of Germany, Italy, Switzerland, and the United States. It is intended to provide a starting point from which the foreign practitioner might attempt a preliminary definition of the legal environment which his client-enterprise seeks to enter. Thirteen authors, with practical legal experience in their respective countries, present the business law of these eight countries through short introductory essays and hypothetical cases. The handbook was edited under the auspices of the Center for International Legal Studies. The "core" sample of each legal system is developed through a two- tier approach, designed to make the most of the thirteen authors' practical legal experience. First, each author has been allowed great latitude in preparing an introductory essay in which he sets out those issues he believes most relevant to the foreign enterprise contemplating entry into his respective domestic market. The breadth of that latitude encompasses the form of the essay as well as its substance, the belief being that the format and approach employed by each author suggest clues to the nature of the legal system which he represents. Second, each author has been presented a hypothetical case for analysis. These analyses represent a unique opportunity for the practitioner to compare the substantive law of a variety of jurisdictions against a common set of facts molded around the entry into and function of a foreign enterprise in a domestic market. These essays and analyses are prepared under the laws and regulations prevailing in the respective jurisdictions as of July 1979. The Center for International Legal Studies, headquartered in Salz- burg, Austria, is devoted to the promotion of international legal education, research, information exchange and understanding. The editor, Pro- fessor Dennis Campbell, is Director of the Center.

Gonovz, S. (editor), SPACE SHutrLE AND THE LAW; L.Q.C. Lamar So- ciety of International Law, University of Mississippi Law Center (1980); ISBN 0-937952-00-1, LC 80-83047; iii, 133 p.; footnotes, appendices, index. Monograph series no. 3. In this collection, the editor brings together contributions from leading authorities and well-known writers in the field of space law. The papers focus on the legal problems expected to arise out of the anticipated uses of the Space Shuttle and encompass issues ranging from command authority and jurisdiction to liability, risk, and insurance. Part I, "Legal Aspects and Issues," introduces the salient legal issues pertaining to the Space Shuttle itself. In the lead article, Gorove ap- 1981 BOOK NoTEs proaches the area by first defining the legal nature of the Shuttle under domestic and international law and then developing the jurisdictional, liability, and sovereignty problems that Shuttle operations will likely'en. gender. The remaining articles in part I concern the more narrowly drawn issues of registration, Shuttle landings, the possibility of collisions, rescue, and the issues stemming from the role NASA will assume as the principal operator of the Space Shuttle. Part II, "The Shuttle and International Space-Flight," presents four articles that examine the legal aspects of international space flight. An attempt is made to first determine just what constitutes international space flight and then to analyze the jurisdiction and control, registration, and liability for damage problems within that context. Subsequent articles consider the effects of extant space treaties and the desirable nature of a future regime to assure space flight safety, as well as the legal issues peculiar to the flights of Spacelab and the extension of criminal jurisdiction aboard the Space Shuttle. Part II, "Liabilities, Risks and Commercial Aspects," concludes the work with two chapters on liability and one on the commercial aspects of the Shuttle's operation. In the liability area, the discussion starts with an identification of the risks involved and moves to an attempt to devise principles of law to successfully insure against them, in order to permit private industry to avail itself of Shuttle usage. Another article analyzes the reasons for, and the implementation of, section 308 of the NASA Authoriziation Act of 1980, giving NASA broad and flexible authority to facilitate the allocation of third party tort liability risks attending Shuttle operations. The last piece describes commercial considerations of Shuttle flights such as user charges, launch scheduling, and space allocation, concluding that Shuttle capabilities will greatly increase commercial activity in space during the eighties. Stephen Gorove is Professor of Law at the University of Mississippi Law Center, a Corresponding Member of the International Academy of Astronautics, and International Astronautical Federation delegate-observer to the U.N. Committee on the Peaceful Uses of Outer Space.

HEISLER, M.O. & LAWRENCE, R.M., INTERNATIONAL ENERGY POLICY; D.C. Heath & Co., Lexington, MA (1980); $22.95; ISBN 0-669-02920-7, LC 79-4748; 240 p.; table. Part of the Policy Study Organization Series. The objective of this book is to provide a low-key but scholarly analysis of the external energy scene in order to stimulate a broad range of American responses to the situation. Two types of analysis were chosen for presentation. One is the analysis of the emerging international energy production and consumption linkages and the other is a comparative political analysis. DEN. J. INT'L L. & POL'V VOL. 11:149

Part I, "The Growing Interdependence of Energy Production and Consumption," provides a background for discussion of energy policy. It addresses internal and external energy policy, emphasizing worldwide interdependence and problems associated with nuclear development and other advanced technology such as solar collection. Part II, "Comprehensive Energy Policies," consists of five comparative studies to determine how other societies within different political, economic, and geographical contexts resolve energy problems. It examines U.S. energy policy in the context of international interdependence. The purpose of the examination is to discover possible insights into our own energy problems. The author analyzes energy policies in major European countries, in the U.S.S.R., and in China. The author acknowledges but omits an analysis from the classical imperial perspective. Although this analysis is discussed in the United States, it would entail the development of theories of exploitative relations with energy-producing states, and the authors declare this task inappropriate for their book. Robert M. Lawrence is Professor of Political Science at Colorado State University. Martin 0. Heisler is Associate Professor of Political Sci- ence at the University of Maryland. Professor Heisler specializes in comparative European studies. He spent the academic year 1979-1980 as Vis- iting Professor at the Institute of Political Science at Aarhus University in Denmark.

HUISKAMP, J.C.L., BRACEWELL-MILNES, B. & WISSELINK, M.A., INTER- NATIONAL TAX AVOIDANCE, VOLUME A: GENERAL AND CONCEPTUAL MATE- RAL (1979); ISBN 90-200-0510-3; 368 p.; footnotes, bibliography, appendices. VOLUME B: COUNTRY REPORTS (1978); ISBN 90-200-0511-1; 344 p.; footnotes, bibliography. Kluwer Law and Taxation Publishers, Stromarkt 8, T.O.P. 23, Deventer, The Netherlands, T74411. Available in the United States from Kluwer Law and Taxation, 160 Old Derby Street, Hingham, MA 02043. Part of the International Series of the Rotterdam Institute for Fiscal Studies. The two volumes of InternationalTax Avoidance contain an analysis of the policy of six Western countries towards international tax avoidance. Volume A, which is divided into eleven parts, contains general information about international tax avoidance. Part I is a brief introductory section. The other ten parts cover the following topics: methods of international tax avoidance; tax havens; legal measures taken by national governments to combat international tax avoidance; the administration of these legal measures; the collaboration between governments to combat international tax avoidance; the legal theories and concepts of international tax avoidance; abuses of tax laws; and abuses of tax treaties. The 1981 BOOK NOTES two appendices discuss how to avoid taxes by forming a trust in Liechten- stein or by incorporating in the Netherlands Antilles. Liechtenstein and the Netherlands Antilles are well-known tax havens. Volume B contains reports of six countries and their policies towards international tax avoidance. The six countries were chosen because they are Western countries important in international trade and because they exemplify the four principal legislative approaches to the question of international tax avoidance. The Netherlands exemplifies the most lenient approach, which is to have few and simple laws against international tax avoidance. Belgium and France have more laws concerned with international tax avoidance but still do not have comprehensive or very stringent regulations aimed at eliminating international tax avoidance. The United Kingdom represents the third approach and hag very few laws against international tax avoidance, but the laws that do exist are very severe. Finally, the United States and West Germany have comprehensive systems of law to regulate international tax avoidance. Also included in Volume B is an examination of the tax laws of each of the six countries, each country's residence requirements for tax purposes, how each country administers its tax laws, the requirements of exchange, each country's concept of tax abuse, and how each country seeks to prevent international tax avoidance. The three authors are members of a research team at the Rotterdam Institute for Fiscal Studies who compiled the information contained in the two volumes. The three named authors were primarily responsible for the actual writing of International Tax Avoidance. In addition, J.C.L. Huiskamp was Project Leader of the team.

KAUFMANN, J., UNITED NATIONS DECISION MAKING (3d ed.); Sijthoff & Noordhoff International Publishers, Alphen aan den Rijn, The Nether- lands (1980); ISBN 90-286-0410-3, LC 80-50455; xiv, 283 p.; footnotes, glossary, index, annexes, charts. The book explores the formal and informal decisionmaking processes employed at the United Nations. It is divided into three parts. Part I analyzes the decisionmaking processes in the General Assembly, the Se- curity Council, and the Economic and Social Council. The various committees of the General Assembly are discussed. The analysis of the operation of the Security Council emphasizes its unique role as conflict-solver and the increasing importance of consensus-type decisionmaking. The failure of the Economic and Social Council to achieve the objectives set forth for it in the U.N. Charter is also analyzed. Part II, "Dynamics of U.N. Decision Making," provides a survey and an analysis of the various factors and procedures which together make up the U.N. decisionmaking process. Topics discussed are: the rise of pro- DEN. J. INT'L L. & POL'Y VOL. 11:149 grams of economic assistance to developing countries, the increased use of ad hoc general conferences under U.N. auspices, the significance of special sessions of the General Assembly, the role of groups such as the Group of 77 and the European Communities, the organization and work methods of delegations, the resolution and voting process, tactical moves, the significance of speeches, and the role of committee officers. The third and final part of the book contains a collection of case studies that illustrate how to successfully use and manipulate the U.N. decisionmaking procedures to get a proposal adopted. This section also contains a discussion of the future of U.N. decisionmaking.

KAY, D.A., Thu FUNCTIONING AND EFFECTWIVEMSS OF SELECTED UNITED NATIONS SYSTEM PROGIAMS; West Publishing Company, P.O. Box 3526, St. Paul, MN (1980); $12.00 (paper); LC 79-27065; ix, 208 p.; footnotes, tables, forward. The American Society of International Law, Studies in Transnational Legal Policy No. 18. This book is the report that resulted from a study sponsored by the International Organization Research Project of the American Society of International Law with funds provided by the Department of State. It explores some of the issues facing the U.N. operational programs in three particular areas. The study first evaluates the performance of the U.N. programs in the field of human nutrition. Included is a detailed report of the World Food Program in Egypt as an example of the limitations hin- dering the effectiveness of the entire program. Then the book details the performance of the U.N. program to control and regulate the use of narcotic and psychotropic drugs. The major focus of this section of the book is on the United Nations Fund for Drug Abuse Control (UNFDAC), a new operational element in the U.N. system. The last major area of emphasis dealt with by the study is the performance of the United Nations in preventing the diversion of nuclear materials to nonpeaceful uses. The report claims that a major transformation in the U.N. system has occurred in the last eighteen years due to the increasing economic and technical interdependence of nations and to the demands of developing countries for internationally provided services. Believing that the functional and technical operations of the United Nations are becoming more politicized, the report claims that the future of the organization is in doubt. It therefore suggests guidelines that should result in more coherent policymaking. The American Society of International Law was organized in 1906. Its purpose is "to foster the study of international law and to promote the establishment and maintenance of international relations on the basis of law and justice." 1981 BOOK NOTES t

KIDRON, M. & SEGAL, R., THE STATE OF THE WORLD ATLAS; Simon & Schuster, Simon & Schuster Building, Rockefeller Center, 1230 Avenue of the Americas, New York, NY 10020 (1981); ISBN 0-671-42439-4 (paper), ISBN 0-671-42438-6 (cloth); v, 132 p.; footnotes, subject index, table of states and dependent territories, 66 maps. This fascinating little atlas provides graphical information about major topics of international concern. Utilizing Winkel's Tripel projection map-an "equal-area" projection-instead of Mercator or Peleris projections, the atlas endeavours to be truly international in scope. It not only shows the worldwide incidence of conditions and events, but also associates that incidence with the underlying structure of the self-perpetuating system of sovereign states preoccupied with aggrandisement and conflict. Thus, the atlas seeks to provide a frame of reference for the changing pattern of world events and seeks to reveal connections that are hard to grasp or that have been deliberately obscured. In sixty-six maps, organized into twelve sections, the atlas portrays the state of the world. The first section shows how states have prolifer- ated in the last few decades and how, with their rival claims, they are reaching out to possess the last uninhabited land mass (Antarctica), the high seas and the sky. The maps are next used to examine the military preoccupations of states and the squandering of resources on war, the threat of war, and the preparations to meet the threat of war. Next, the maps show how states are unequally endowed with natural and developed resources, how they employ these endowments and how they are related to the power of private industry and finance. Last, the maps are employed to consider the impact of all these factors on labor, on society in general, and on the environment. The maps trace the symptoms of crisis and identify some of the developing challenges to the world system. The great mass of information presented in these maps necessarily comes from governments and international agencies whose statistical compilations often constitute the only available source of information on a given topic. However, realizing that all statistical information may contain skewed results and personal biases, the authors have only used those sources of information valid enough for broad comparison. In a number of instances, where incomplete, ambiguous or contradictory information was present, maps were based on a degree of personal judgment but were checked against other sources whenever possible. The State of the World Atlas provides a startling perspective on the cost of pursuing state interests. The costs include the destruction of the environment and the erosion of human rights. The atlas illustrates some of the challenges to the prevailing world system, and emphasizes, in its closing pages, an optimistic and. positive approach to reconciling many competing interests. DEN. J. INT'L L. & POL'Y VOL. 11:149 t

LILLICH, R.B. & MOORE, J.N. (editors); U.S. NAVAL WAR COLLEGE IN- TERNATIONAL LAW STUDIES: ROLE OF INTERNATIONAL LAW AND AN EVOLVING OCEAN LAW (vol. 61); Naval War College Press, Newport, RI (1980); xvii, 699 p.; bibliography, footnotes, index. LILLICH, R.B. & MOORE, J.N. (editors); U.S. NAVAL WAR COLLEGE IN- TERNATIONAL LAW STUDIES: THE USE OF FORCE, HUMAN RIGHTS AND GEN- ERAL INTERNATIONAL LEGAL ISSUES (vol. 62); Naval War College Press, Newport, RI (1980); xxii, 758 p.; bibliography, footnotes, index. Part I of volume 61 is devoted to the issue of the role of law in the international arena and includes a general introduction to international law. It discusses of the Soviet attitudes toward international law, the political factors, recent trends, and the relevance of international law for the naval officer. Authors of the seventeen articles in this section include Richard Baxter, John Hazard, Oliver Lissitzyn, Leon Lipson, Richard Salk, and Wilfred Hearu. The articles discuss the misperceptions of the Realpolitik view of international law, and point out that there is an effectively functioning and binding "constitutive process," that compliance may be more meaningful than sanctions, and the importance of considering international law in key national security decisions. Part II of volume 61 addresses the issues of marine law. The authors include Myres McDougal, Philip Jessup,' Joseph McDevitt, Richard Bilder, Michael MccGwire, and many others. Among the thirty-one articles in part II, the topics addressed include the Law of the Sea negotiations, marine mineral resources, jurisdiction, the archipelago concept of the limits of territorial seas, innocent passage, the strategic implications of the continental shelves, electronic reconnaissance from the high seas, seabed arms control, naval operations, and pollution. Volume 62 is mostly devoted to the issue of the use of force in international conflict management. Authors such as James Barber, Richard Baxter, Herbert Briggs, Charles Fenwick, Eric Hayden, John Norton Moore, and James Turner discuss the use of force, the laws of war, the conduct of hostilities, arms control, and the control of terrorism. They also endeavor to define aggression, insurgency, intervention, and minor coercion. Volume 62 also contains a section which has four articles on human rights. These articles examine asylum and the international law concerning aliens, civilians and combatants in times of war. In addition, this volume has eight articles on the international legal issues of jurisdiction, the status of armed forces abroad, recognition of states and individuals, and trusteeship obligations. John Norton Moore is the Walter L. Brown Professor of Law and Director of the Center for Oceans Law and Policy at the University of Virginia. He was formerly Counselor on International Law to the Depart- ment of State, U.S. Ambassador to the Law of the Sea Conference, and Chairman of the National Security Council Interagency Task Force on 1981 BOOK NoTEs

the Law of the Sea. Richard B. Lillich is Professor of Law at the Univer. sity of Virginia, and has been Project Director of the Procedural Aspects of International Law Institute. He has also held the Charles H. Stockton Chair of International Law at the United States Naval War College.

Np.wcrry, M.A., COPYRIGHT LAW IN THE Sovr UNION; Praeger Pub- lishers, New York, NY (1978); ISBN 0-275-56450-9, LC 76-12867; x, 212 p.; footnotes, bibliography, index, appendices. Part I of the book describes the historical development of copyright law in the U.S.S.R. from its origins under the tsarist regime to modern times. In part II, current Soviet copyright law and the procedures and regulations employed to administer that law are discussed. The topics dealt with in part II include: the kinds of works that may be protected; the individuals subject to copyright protection in the U.S.S.R.; the nature of the rights embodied in copyright; the various free uses, compulsory licenses, and compulsory purchases permitted by Soviet statute; the provisions regulating author-publisher contracts and royalties paid to authors; remedies available upon breach of such contracts; the powers and functions of the All-Union Agency on Copyrights; and the protection accorded Soviet authors abroad. In part III, the various problems and controversies that have arisen as a result of Soviet accession to the Universal Copyright Convention (UCC) are analyzed. In particular, the possible application of the UCC to internal dissidents in the U.S.S.R. and to republi- cation without permission of Western scientific and technical journals in the Soviet Union are discussed in detail. Also in part III, the past course and future prospects for U.S.-U.S.S.R. trade in literary property are examined. Finally, the copyright provisions of Soviet law are set out in two appendices at the end of the book. M.A. Newcity received both an M.A. degree in international affairs and a J.D. degree from the National Law Center of the George Washing- ton University. He is currently a practicing attorney in New York and a member of the Committees on Soviet Law, East-West Trade and Invest- ment, and International Copyright Treaties and Laws of the American Bar Association. He has previously published articles relating to Soviet copyright law. His essay, "The Universal Copyright Convention as an In- strument of Repression: The Soviet Experiment," was awarded National First Prize in the 1974 Nathan Burkan Memorial Competition. t

NEWTON, W.H. III, INTERNATIONAL ESTATE PLANNING; Shepard's/Mc- Graw-Hill, P.O. Box 1235, Colorado Springs, CO. 80901 (1981); ISBN 0- 07-046430-8, LC 80-28413; vii, 539 p.; footnotes, tables, two appendices, DEN. J. INT'L L. & POL'Y VOL. 11:149 supplement. The purpose of this book is to give insight into the theories and approaches of international estate planning. Because the subject matter is complex, the book is divided into eleven major chapters. The first chapter gives an overall picture of international estate planning and jurisdictional problems. It defines an international estate as one "in which the decedent's property touches more than one jurisdiction." An international estate plan is therefore an arrangement for disposing of such property. Situations involving conflicts of law issues arise frequently in international estate planning because an international estate by its nature touches more than one jurisdiction. Thus, chapter two is devoted to the issues and approaches to be taken in these situations. U.S. citizens, residents, and domiciliaries are subject to federal taxation even though they are physically present in a foreign jurisdiction or their property is situated in a foreign jurisdiction. Likewise, nonresidents and nondomiciliaries may be subject to federal taxation by the United States. The extent of taxation relates to the jurisdictional bases, source of income, and situs of assets. The United States is also a party to income, estate, gift and generation-skipping transfer tax treaties which provide tax benefits to U.S. taxpayers abroad and to foreign taxpayers in the United States. Chapters three, four and five discuss these interrelated tax problems. The trust is used frequently in international estate planning because it facilitates avoidance of forced heirship provisions, protects against con- fiscation of property and allows continued management of assets without interruption on the death of a beneficiary. Discussion of the use of a trust and its tax implications is contained in chapter six. The book also discusses the generation-skipping transfer tax, the use of partnerships and corporations as international estate planning tools, international transfers of foreign situs property, and the probate and administration of international estates. This book facilitates one's understanding of the complex subject matter of international estate planning by illustrating alternative approaches to specific factual patterns through a series of examples set forth in every chapter.

RHODE, G.F. & WHrTLOCK, R.E., TREATIES OF THE PEOPLE'S REPUBLIC OF CHINA, 1949-1978: AN ANNOTATED COMPILATION; Westview Press, Inc., 5500 Central Avenue, Boulder, CO 80301 (1980); $24.50 (cloth); ISBN 0- 89158-761-6, LC 79-27904; ix, 207 p.; footnotes, table of contents, tables, maps. This work is part of the Westview Special Studies Series on China and East Asia. This work is the first English compilation of Chinese treaties. The 1981 BOOK NOTES authors investigate the use of treaties by the Chinese as a foreign policy tool. Essentially, the Chinese treaties fall into five categories: friendship treaties, boundary treaties, commerce treaties, consular treaties, and one treaty of dual nationality. The authors note that the Chinese pattern is first to establish friendly ties with a nation through the use of friendship treaties before entering into the more technical types of treaties involving boundaries, trade, or consular officers. Chapter one examines the historical evolution of the Friendship Treaty. For the most part, the Chinese Friendship Treaties are of a general nature, stressing peaceful co-existence, friendship, and general cooperation in political, economic, technical, and cultural spheres. Chapter two traces the development of Boundary Treaties. Chapter three focuses on Treaties of Commerce and Navigation. Chapter four outlines the format of Chinese Consular Treaties. Chapter five focuses on the Sino-Indo- nesian Treaty of Dual Nationality. Chapter six focuses on the development of the Treaty of Peace and Friendship between China and Japan, while chapter seven traces the normalization of relations between the United States and China. In the last chapter, the authors discuss China's motivations for placing special importance on the topics it has chosen as the subjects of its treaties. Moreover, the authors suggest that this compilation will prove to be useful as a valuable research tool. Grant F. Rhode is Visiting Lecturer at Tufts University on the comparative anthropology of China and Japan. Reid E. Whitlock is also Visit- ing Lecturer at Tufts University in the field of Oriental Studies.

SIMONS, W.B. (editor), THE SoviET CODES OF LAW; Sijthoff & Noordhoff International Publishers, Alphen aan den Rijn, The Nether- lands (1980); $92.50; ISBN 90-286-0810-9, LC 80-53755; xviii, 1239 p.; footnoted introduction by the editor. One of a series of publications on law in Eastern Europe issued by the Documentation Office for East Euro- pean Law, University of Leyden, The Netherlands. This volume should be a valuable tool for those in the academic world, in business and banking, in government service, or in any field requiring access to and knowledge of the basic Soviet codes of law. For the first time, all the codes in force in a union republic, together with the all- union codes for use where jurisdiction in a particular area is vested by the U.S.S.R. Constitution in the federal government, have been translated into English and published in one volume. The volume includes the codes (kodesky) of the largest and most important union republic in the Soviet Union, the Russian Soviet Federa- tive Socialist Republic (RSFSR). The fourteen other union republics, which also have their own codes, have not been represented in the volume because their codes follow closely those of the RSFSR. Also included are DEN. J. INT'L L. & POL'Y VOL. 11:149

some legal texts which are not called codes but which fulfill the same general function and which are based on fundamental principles of legislation (osnovy zakonodatel' stva). These noncode materials include the RSFSR laws on health, education, and court organization. Relevant federal jurisdiction codes on air, custom, and merchant shipping have been included, but the volume does not contain all the federal principles which are part of the codification of Soviet law and which occasionally must be consulted along with the republican codes. The following RSFSR codes can be found in the volume: The Consti- tution; The Criminal Code; The Code of Criminal Procedure; The Correc- tive Labor Code; The Civil Code; The Code of Civil Procedure; The La- bor Code; The Code on Marriage and the Family; The Water Code; The Land Code; The Law on Health Care; The Law on Public Education; The Code of Mineral Resources; The Forestry Code; and The Law on Court Organization. The codes as translated reflect all the recent developments and amendments that occurred prior to the publication date. For further developments, the user is referred to the quarterly Review of Socialist Law which is also issued by the Documentation Office for East European Law of the University of Leyden Faculty of Law. In addition to the codes, an informative introduction presents two general observations relevant to civil law systems. One is that while civil law codes are characterized by their systematic and comprehensive treatment of a specific branch of law, no continental civil lawyer relies solely upon the code. Some codes either deal briefly or not at all with certain subjects, and not all the law of civil countries has been subject to codification. Second, no code in any of the civil law systems has yet been fully integrated to contain all the provisions of the substantive law relating to a given area of the law. Against this general background of the functioning of civil law systems, the historical development of the Soviet codes is compared and contrasted with those of Western European civil law countries. Despite striking differences that derive from political, economic, social and cultural factors, one can find technical features common to both Western European and Soviet civil systems. There are points of diver- gence, however, which are also discussed briefly in the introductory essay. At the time of publication, W.B. Simons was a member of the Faculty of Law of the University of Leyden, The Netherlands.

TIMAGENIS, G.J., INTERNATIONAL CONTROL OF MARINE POLLUTION; Oceana Publications, Inc., Dobbs Ferry, NY (1980); $37.50 (cloth); ISBN 0-379-20685-4 (vol. 1), 0-379-20686-2 (vol. 2); iv, 877 p.; footnotes, tables, abbreviations, appendices, index of selected treaties and general outline. This study is concerned with the recent development of the conven- 1981 BOOK NOTES

tional law on marine pollution, particularly in the areas of dumping and ships where conventional law is more developed. The analysis focuses on the legal developments from 1972 to 1979, a period of immense change in the law of the sea and a period when the need for regulation in the environmental area was recognized. The study is composed of four parts. The first part is general in nature. After a brief review of the conventions concerning marine pollution and a consideration of marine pollution as a legislative problem, some emerging principles of the law of marine pollution are examined, including basic concepts, settlement of disputes, the role of the individual, and economic aspects of the law of marine pollution. This part concludes with a brief review of the results of the U.N. Conference on the Human Envi- ronment which the author feels will be the basis for all subsequent developments. The second and third parts include a detailed analysis of the Oslo and London Conventions on Dumping at Sea and the Intergovernmental Maritime Consultative Organization (IMCO) Convention on Marine Pol- lution of 1973. These two parts form the main body of the study. Inter- pretation of the conventions and the drawing of some general conclusions by the author in these two parts provide an understanding of the law on marine pollution and the law of the sea in general. The fourth part of the study is a brief and up-to-date review of the negotiations in and the re- suits of the Third U.N. Conference on the Law of the Sea. The work is extensively based on diplomatic documents and on experience the author acquired during the major environmental conferences he attended, including the U.N. Conference on the Human Environment (1972), the London Conference on Dumping at Sea (1972), the IMCO Conference on Marine Pollution (1973), and the U.N. Conference on the Law of the Sea (1974-1979).

VOSKUIL, C.C.A. & WADE, J.A. (editors), HAGUE-ZAGREB ESSAYs 3; Sijthoff & Noordhoff International Publishers, Alphen aan den Rijn, The Netherlands (1980); ISBN 90-286-0749-8; xi, 329 p.; footnotes, appendix, list of abbreviations. Proceedings of the Hague-Zagreb Colloquium on the Law of International Trade held in Opatija, Yugoslavia. The book contains the reports and discussions of the third session of the Hague-Zagreb Colloquium held at Opatija, Yugoslavia. Maritime law was emphasized at the session, and three of the four sections of the book are devoted to this topic. The three maritime law sections discuss carriage of goods by sea, maritime collisions and maritime air pollution. In addition, there is a fourth section on commercial arbitration and an appendix which contains student reports on a maritime collision and oil pollution case. DEN. J. INT'L L. & POL'Y VOL. 11:149

In the section on carriage of goods by sea, the international conventions and other instruments which are involved in the determination of contractual liability for carriage of goods are discussed in a report by Robert Cleton. The Yugoslav law on contractual liability for carriage of goods by sea is the topic of the report by EP Pallua. The section also contains a report of the discussions at the colloqium on this topic. The noncontractual liability resulting from collisions at sea is examined in another section. In the two reports by L. Erades and V. Fili- povic and the report of the discussions, international, Dutch and Yugo- slav law on this topic are examined. In particular, the limitation of liability by Dutch and Yugoslav maritime law is highlighted. In the section on maritime oil pollution, there is a report by B. Boute and B. Vukas on international law and the pollution of the sea. In addition, liability for oil pollution is examined in the context of Dutch maritime law by M. Sumampouw. The commercial arbitration section contains two reports on the significance and application of the principle of bona fides in international commercial arbitration. C.C.A. Voskuil is Director and J.A. Wade is Principal Research Of- ficer of the T.M.C. Asser Institute in the Hague. The T.M.C. Asser Insti- tute is an inter-university institute founded by the Dutch universities of- fering courses in international law and is the sponsor of the Hague-Zagreb colloquium.

WALDHEIM, K., BUILDING THE FuTUIW ORDER: THE SEACH FOR PEACE INAN INTERDEPENDENT WORLD; The Free Press, A Division of MacMillan Publishing Co., Inc., 866 Third Avenue, New York, NY 10022 (1980); $12.95 (cloth), ISBN 0-02-933670-8, LC 79-6146; xxv, 262 p.; footnotes, index. Foreword by Brian Urquhart. Editor's Preface by Robert L. Schif- fer. Introduction by Kurt Waldheim. As a synthesis of some of the former U.N. Secretary-General's key reports and statements over the past eight years, this book is divided into nine parts, each of which is suggested by one of the basic functions or concerns of the United Nations as set forth in its Charter. The areas examined include: threats to peace and peace-keeping, disarmament, human rights, and economic and social development. Each of the nine parts is divided into chapters which are designed to provide thematic continuity rather than chronological order. The first chapter of each part summarizes the issues detailed in subsequent chapters of that section. Part two, for example, examines the U.N. Charter's mandate "to maintain international peace and security." The opening chapter of part two, "A Shift in Emphasis," is drawn from the annual reports of Waldheim to the General Assembly from 1972 to 1979 and sketches a broad outline of the organization's evolving role in world affairs. The 1981 BOOK NoTEs

"shift in emphasis" refers to a decline in the degree to which the United Nations is dominated by tensions between the superpowers, and indicates a shift toward growing involvement in problems which divide countries along so-called "North-South" lines. Also emphasized is the shift toward a greater U.N. role in regional conflicts generally not directly involving the greatest powers, but which have the potential to lead to superpower involvement. The author fears that "the major potential threat to world peace at the present time is the possibility that one or another regional conflict may unexpectedly become closely connected with the complex relationship of the nuclear powers and strain that relationship to the break- ing point." Subsequent chapters in part two then discuss such regional or bilateral conflicts as: the crisis between the United States and Iran, the Middle East, southern Africa, and Cyprus. All discussions are drawn from official reports and addresses. Similarly, part five addresses global economic and environmental issues, first by sketching the changing nature of the "new breed of global problems" confronting the organization and then addressing particular issues with excerpts from statements made to such U.N. gatherings as the 1972 Conference on the Human Environment, the 1974 Conferences on World Population and Food, the 1977 Conference on the Law of the Sea, and the 1979 Conference on Science and Technology. Kurt Waldheim became the fourth Secretary-General of the United Nations in 1971 and was reelected in 1976. He was succeeded by Javier Perez de Cuellar in 1981. Kurt Waldheim previously served as Austria's Minister of Foreign Affairs and as its chief representative to the United Nations.